Warren's Wisdoms: First Annual Warren Ward Associates 529 Plan Top 5- 9/22/2005
If you think education is expensive, try ignorance.
With deep appreciation to Derek Bok, past President of Harvard, I echo his sentiment expressed above. Statistics make it clear that a college education, while undeniably expensive, is a very good investment of both time and money. College graduates earn more money in their lifetimes and (at least according to surveys) are happier with their lives.
The task then, is to figure out how to fund a college education for yourself, your children or your grandchildren.
At both state and federal levels, government offers various options to help out, including the subject of today�s� comments, the Section 529 Plan. I sometimes think everyone at the IRS must have missed a day of work when this slid through Congress because it includes so many tax breaks for college savers. These plans are named after a section of the tax code, as is your 401(k). This particular section allows tax-advantaged saving towards college and must be sponsored by a state, which in turn decides whether to offer additional tax breaks to its residents. Most readers of these messages live in Indiana, a state which does not offer such tax breaks. Since Indiana�s plan is not competitive in terms of either costs or investment options and since it lacks tax incentives, I felt free to browse through the 62 remaining plans on behalf of our clients.
I base the recommendations below on my belief that any investment strategy must begin with good investment choices and be accompanied by reasonable costs for participation. The result of my research is the First Annual Warren Ward Associates 529 Plan Top 5, ranked and explained below.
Number 1 - College Savings Plan of Nebraska
Because I believe that a good underlying investment should be the bottom line for all investment strategies, the Nebraska plan remains my first choice. I have recommended this plan before, as sold through the discount brokerage firm T D Waterhouse. Whether you invest directly with Nebraska or go through Waterhouse, this plan combines superior investment options with reasonable operating costs.
Number 2 � Tomorrow�s College Investment Plan (Texas)
A combination of a reasonable range of T Rowe Price fund choices and low operating expenses make this plan a good option.
Number 3 & 4 (tie) � Utah Educational Savings Plan & Vanguard College Savings Plan (Nevada).
Both feature Vanguard�s funds with Nevada offering a greater selection & slightly higher expenses and Utah fewer funds & lower expenses.
Number 5 � Delaware College Investment Plan.
This plan is one of several which utilize Fidelity funds. Delaware�s is the lowest cost of these and it offers a well-realized �age based� portfolio which is especially suitable for people who want to save but don�t want to have to make investment allocation decisions.
If you are a planning client of WWA, please contact us (if we have not already contacted you) for specific recommendations for your own situation. Those of you who are receiving this message as friends of the firm should check with your own financial and tax advisors to be sure any general recommendations we make are suitable in your situation.
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