529 Savings Plan Briefing

On the heels of the recent high ranking of the Ohio CollegeAdvantage 529 Savings Plan, Investment News is reporting that Jacqueline Williams, the executive director of the Ohio Tuition Trust Authority is leaving to become director of New America Foundation’s College Savings Initiative, effective June 1.  There is no word yet on who might take her place.

Back in the "good news" category, PR Newswire reports that according to Savingforcollege.com's newest 529 Fee Comparison Study, the Ohio CollegeAdvantage 529 Savings Plan is the lowest-cost, nationally-sold 529 plan.

Rankings of Best and Worst 529 Savings Plans

Investors in Ohio’s CollegeAdvantage 529 savings plans have something to feel good about.  The Morningstar investment research firm ranked the savings plan as the best in its rankings released today.  The research firm liked the fact that the Ohio Tuition Trust Authority not only created the plan, but it manages it as well.  Both low fees and a variety of investment options, including age-based options, were important factors in Morningstar’s favorable ranking.

The news for the brokerage sold Ohio Putnam CollegeAdvantage fund was not nearly as good.  Morningstar ranked the Putnam fund “at the polar opposite end of the spectrum.”  The research firm did not like the fund’s heavy exposure to Putnam Funds and recommends avoiding the plan.

529 College Savings Plans Not Without Risk

While you do not get a federal income tax deduction for contributions to a 529 college savings plan, you do benefit from the tax-free growth of the account.  The key factor is that your account must grow to realize that benefit.  As you probably know, your 529 plan is subject to the same risks as most other investments.  Parents with younger children who will not be using the investment in the immediate future are less concerned with the market woes.  You can imagine the disappointment of a person needing to use their account now or in the near future and the value of their account has dropped 30 – 50%.

529 College Savings Plan Follow Up

Yesterday I posted an update on 529 college savings plans, noting that the IRS will allow investors to make two investment changes for 2009.  Coincidentally, The Columbus Dispatch ran an article today, stating that the Ohio Tuition Trust Authority has expanded investment options by adding six new funds designed to give investors more diversity of funds and to reduce investment fees.

Do You Have a 529 College Savings Plan?

This year there is a slight but significant change to the investment rules for 529 college savings plans.  Previously an investor could only change investments once a year.  This created some issues in 2008 when the market sank and investors had already made an investment change for the year.  The IRS will allow investors to make 2 investment changes for 2009.