Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Kiplinger
Kiplinger
Business
Erin Bendig

Best 529 Plans of 2025

.

The best 529 plans can be valuable tools for building college savings. So, if you're looking to save for your child or grandchild’s future college expenses, you’ve likely considered opening one of these tax-advantaged plans. But how do you choose the right one?

529 plans allow a contributor to prepay a beneficiary's qualified higher education expenses at an eligible educational institution or to contribute to an account for paying those expenses. While 529 contributions must be made with after-federal-tax money, your contributions grow free from federal or state tax, making them solid options for education savings. It's no wonder they have been rapidly growing in popularity.

However, 529 plans can vary. To select the best one, you’ll need to choose which type of plan makes sense for you and compare tax breaks, benefits for state residents, fees, contribution options, withdrawal restrictions and investment options between plans. Choosing the right plan can take a lot of research, but it’s worth it. An easy place to start is by checking out the top-ranked 529 plans.

Best direct-sold 529 plans

Direct-sold 529 plans are issued directly from a state financial institution. If you choose one of these plans, you’ll be responsible for managing your own investments within the plan’s online account portal. For this reason, these plans are usually cheaper than investor-sold plans.

Here are the top 10 highest-ranked direct-sold 529 plans, according to Saving for College.

Best advisor-sold 529 plans

Advisor-sold 529 plans are available through an investment firm. These accounts typically charge a higher fee, but financial advisers manage the plan’s investments for you. Some savers feel these accounts are worth the extra cost because of the access to professional investment advice, actively managed investments and flexible portfolios.

Here are the top 10 highest-ranked advisor-sold 529 plans, according to Saving for College.

529 prepaid tuition plans

Another college savings option worth considering is a 529 prepaid tuition plan. This type of plan lets savers prepay tuition at today’s tuition rates at eligible public and private colleges or universities. According to FINRA, "Most states guarantee that the funds you put into a prepaid plan will keep pace with tuition."

Prepaid tuition plans only cover tuition expenses, unlike 529 plans which cover other qualified expenses, like room and board, books and supplies. You can fund these accounts with one lump sum or through installment payments. Often, these plans must be used within 10 years, or the interest on initial contributions could be lost.

According to Affordable Colleges, only nine states offer prepaid tuition plans.

The bottom line

Investing in a 529 plan is a great way for parents or grandparents to pass down wealth to the next generation. By helping college students graduate with lower or no student debt, you'll give your kids a leg up when it comes to starting their careers. For students interested in lower-income careers like the arts or non-profit work, graduating without debt may mean the difference between pursuing their dream career or slogging through a high-paying job they dislike to pay off debt.

A 529 plan may also jump-start your child or grandchild's retirement savings. They can roll up to $35,000 in unused 529 plan funds into a Roth IRA in their lifetime. What's not to like about this versatile savings tool?

Related Content

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.