529 plans indexed options

The investment of college savings in a 529 Savings Plan should follow the fundamental principles embedded in the Bogleheads Investment Philosophy: emphasis on low investment costs; broad diversification both within and among asset classes; the use of low cost index funds when available; and careful consideration of risk. Emphasizing low costs suggests that 529 savings plan investors should eschew the advisor sold 529 plans and select among plans that are directly sold. This page provides information on 529 plans utilizing index funds. For an examination of 529 plan essential features, please refer to 529 Plans.

States with no tax deductions or matching contributions
The following states have 529 plans but do not offer any tax deductions or matching contributions for donor contributions to a 529 savings plan. Therefore, it is advisable to select from among the lowest cost plan providers (for age-based plans, currently the Illinois 529; for individual portfolios, currently Ohio) for these states:

Special Case:
These states offer the same deduction in and out of state, so investors should choose from among the lowest cost plans (currently the Illinois 529 and Ohio 529 plans) but they need to be sure to claim their deduction.


 * Arizona provides a deduction for both in-state and out-of-state 529's.
 * Kansas provides a deduction for both in-state and out-of-state 529's.
 * Maine provides a deduction for both in-state and out-of-state 529's.
 * Missouri provides a deduction for both in-state and out-of-state 529's.
 * Pennsylvania provides a deduction for both in-state and out-of-state 529's.

One can determine the breakeven point where using a lower cost plan option becomes cheaper than a state plan providing tax deductible and/or matched 529 contributions by using the following factors.


 * ( 1.) The tax savings amount (Deductible contribution x marginal state tax rate) + match.
 * ( 2.) The cost differential between the plan and the lower cost plan.
 * Dividing (1) by (2) provides the capital accumulation point where the lower cost plan subsequently overtakes the tax benefit.

A number of states now recapture deducted 529 contribution taxes if a plan is transferred to an out of state plan. Refer to this table for a list of these states.

The following states offer Vanguard Portfolios in their 529 plans
The following states have at least one Vanguard index portfolio in their offerings. Footnotes indicate plans closed to out of state investors.

The following tabulation of 529 plan costs is based on information from a SavingsforCollege.com fee study and from plan documents:

Note: Rhode Island and West Virginia provide only one Vanguard Index Fund; Wisconsin provides only two Vanguard funds.

Source: Saving for College and state disclosure documents

The following states offer 529 plans run by TIAA-CREF
The following 529 Plans run by TIAA-CREF are available to all out of state residents.

The following tabulation of 529 plan costs is based on information from a SavingsforCollege.com fee study and from plan documents:

Source: Saving for College and state disclosure documents

The following states offer 529 plans run by Fidelity
The following 529 Plans run by Fidelity are available to all out of state residents.


 * Arizona 529 Plan
 * Delaware 529 Plan
 * Massachusetts 529 Plan
 * New Hampshire 529 Plan

The following tabulation of 529 plan costs is based on information from a SavingsforCollege.com fee study and from plan documents:

Source: Saving for College and state disclosure documents

Additional states offering indexed portfolios
The following states offer index funds in their 529 savings plans. Footnoted entries are not available to out of state residents.

Collegesure 529 Tuition Indexed Programs

 * Collegesure 529 Tuition Indexed Programs