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The 529 college savings plan is the single most popular college savings vehicle for families, accounting for about 30% of colleges savings and available in every state, except Wyoming, and Washington, D.C., according to Sallie Mae, a private lender of student loans.

But there are well more than 50 plans to choose from because many states offer plans that are sold directly to families as well as plans sold by brokers and registered investment advisors. In all cases, however, earnings grow free of federal taxes and withdrawals are tax-free if they’re used for qualified educational expenses such as tuition or room and board. In most cases, total allowable balances can reach into the hundreds of thousands of dollars.

The question for families then becomes which 529 plan to choose. Savingforcollege.com, a website devoted to that goal, recommends that families take into account these factors when doing so:

  • State tax benefits — are contributions to a 529 plan deductible from state taxes? Is that tax benefit limited to only state-based 529 plans or available also for contributions to out-of-state plans?
  • Plan fees, including any annual fees plus expense ratios for investment choices
  • Investment options, including the availability of target date and/or age-based funds that adjust allocations based on a beneficiary’s proximity to college enrollment and of funds with aggressive, moderate and conservative portfolios

Savingforcollege.com publishes a series of ratings for 529 funds, including performance rankings for plans within three categories: direct sold, advisor-sold (meaning broker-sold) and RIA-sold. The performance rankings reflect a composite score in seven asset allocation categories: 100%, 80%, 60%, 40% and 20% equity and 100% fixed income and 100% short-term compared to published investment returns.

Check out the slideshow above for the top 10 ranked 529 plans sold directly to investors, based on their one-year performance. Two of the plans — West Virginia and New York — placed in the top 10 category for three, five and 10 years and two plans — the Kansas and Nebraska Education Savings Trust plans — placed in the top 10 for five years also.

Note that direct-sold plans tend to have higher rankings than plans sold by brokers or RIAs due in large part to their lower fees. Unless otherwise noted, the plans included in the slideshow are available for out-of-state residents.

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