Tax Savings for 529 Plans even if College Has Started

College has already started and you may think that it’s too late to take advantage of tax savings for 529 plans. It looks like you’ve got a little rethinking to do. If you’ve been blessed with good geography, aka live in the right state, you could potentially save several hundred dollars (give or take) on your taxes.  

Here’s a summary of how this idea can work for you. Assuming you have another college savings plan, the money from there is taken and moved into the 529 plan of your state. When the next college tuition bill arrives, it will be paid with the money from the 529 plans. 

By doing this, you can claim a tax deduction from your state income tax. The expense of college has just become a write off on your state income tax return. And just like that, you’ve received a tax savings benefit from your 529.   

Not all states allow this 529 write off, so be sure to do your research. But the good news is that over fifty percent of the states and the District of Columbia will allow you to deduct all or part of your contributions. Rules do vary so be sure to check with your state or a tax professional for more details. 

For example, three states- Kansas, Maine and Pennsylvania, even allow residents to deduct their contributions to out of state plans as well. The tax savings could be several hundred dollars so it is very well worth the effort of doing your homework. Also, be aware that there are a few states that will require the funds to be held in the 529 plans for a minimum time period. 

It is important to choose the right administrator for your plan. By making such an immediate payment to the college, the transaction costs in creating the account will probably be greater than the amount of money that the account will generate. So not all plan providers love this sort of quick transaction. But a good administrator will help you find all the tax benefits.

The state tax department loses revenue with transactions like this so who can tell what sort of changes in policy could be made. The rules governing those write-offs may be changing soon.

And many of the plan managers could change over the next few years, since some 60% of state contracts with their current 529 providers are set to expire by 2010.  This is why it is so very important to check with your accountant or tax professional regarding the 529 plan rules in your state. 

Parents, grandparents, other family members, friends or anyone can establish a 529 plan.  You can even establish one for yourself. Since there are no age restrictions, it’s never too late to open a 529 plan (named after its section in the IRS code). Funds are generally available for immediate use.  And it’s easy to withdraw money from your fund. 

 By filling out certain forms, you can even arrange for the money to be sent directly to the college. Take advantage of the tax opportunity while you still can. It’s only too late once you graduate because unfortunately, student loan payments don’t count.  Of course, there’s always graduate school.

A few hundred dollars here and there can really add up especially during the college years.  So what if college has started?   Look for those state tax breaks with a 529 plan.  Take advantage of the tax savings for 529 plans right now even though college has started and put a little extra green in your pocket.

Sound Reasons For Multi-State 529 Contributions

Getting your kids through college seems to be rising rapidly these days and one way to help curb the cost is Multi-State 529 contributions. What exactly is 529 contributions and how do they effect your child's education? With the mounting cost of education many parents and even grandparents have to choose between retirement savings and putting kids through college.

The 529 college savings plan is an alternative that many people are looking into to bridge the gap between the higher costs and what they kids can't afford. The Multi-State 529 college plan lets you save money free of state and federal taxes and use it tax free as long as you are using if for higher education.

These 529 contributions can be used for public or private schools. Many people wonder where the 529 code comes from. The code comes from the IRS to distinguish the tax saving plans and the savings these programs can do for their users.

These multi-state 529 programs are something people are looking deeper into as many sound reasons can be explained for their popularity. These tax programs are used in most every state and the District of Columbia. This is one of the main reasons for the popularity.

A lot of times these programs can be moved state to state which is a plus if your are moving and you are enrolled in these programs. In usually varies state to state so check into where you’re going before you decide. Tax breaks are another very sound reason to use these 529 plans and that is something that varies very much depending on where you live.

Each state that has their own program usually regulates it. This means one state could give you a better break than another. Always remember even though these programs are on the same basic premise it doesn't mean they are exactly the same. Look them over carefully.

529 programs are one of the things if started early you can really see the benefits down the road. Depending on which state you’re in and their program you can save yourself a lot of money. the key though is to get in early and keep a steady investment over the years. Some state institutions will actually let you lock in a rate now even if your son or daughter goes in five or ten years.

Now with that program it varies with each university. These programs give grandparents a chance to put away money for their grandchildren and make a difference in their future, which makes them feel good and worthwhile. 529 programs also give grandparents tax breaks by their contributions which when they die leaves less of a tax burden for their kids.

To get the most of these 529 plans the key is to start very early and learn the in's and out's of the programs. Not every one is equal and some our better than others. As with any investment you should look carefully at the plan you want to use.

As costs increase more people will look to these 529 programs and kids are even looking at them to help defray some of the cost of higher tuition bills. Making sound decisions now of your child's future could save you a lot of money down the road.

Multi-State 529 programs and contributions to these programs will continue to grow as the need does. get in early and reap the benefits that will come from it. These are good effective programs and it's hard to discount the sound reasons for joining one and the good it will do for your child's education.

Good News/Bad News on 529 Gift Tax Situation

When investing in anything, particularly for college, many advantages and disadvantages go hand in hand with the savings. For example, there are many tax advantages to having a 529 savings plan, but there is the disadvantage its intention is solely for college.

This means that you are able to save more money than you can with any other investment, but if this money’s purpose changes, this savings no longer applies. Similarly, there are both good and bad points on the gift tax situation of the 529 savings plan for college.

The first and most important thing to understand about gift tax issues on your 529 savings plan is that the rules may vary from state to state. This is very important, and if it is an issue with you, considering the rules and regulations of other states’ programs may be a good way to go.

Typically, gift taxes are taxes paid on gifts of monetary funds because they are a source of income. These taxes may apply when relating to a 529 savings plan, but there are limitations. It is important to understand that the gift tax limitations stop at $12,000 per year, which may be bad news for those who need to use more funds than this.

However, this increased in 2006 from the $11,000 it was originally set at, and may increase to an amount even higher than that by the time your child reaches college age. It is also important to know that this only applies if the owner of the account is a single person. This is double that amount for a couple, and modifications are possible if the amount of contributions will exceed this limit.

For example, if you make an agreement to contribute in equal amounts over a five year period, you will be allowed to contribute up to $60,000 every calendar year for an individual or double this for a couple.

By agreeing to contribute in equal amounts, and to make no other monetary gifts to the beneficiary, you will receive gift tax exclusions through the federal government. Typically, this would not be possible, and the cost of investing would be much higher.

The bad news about this gift tax is that this applies at the federal level. For those living in, and contributing to, state programs of the 529-college savings plan of states that have no income tax, this is the only concern. However, the rules may be different for gift taxes at the state level if there is a state income tax.

This is why it is important to discuss and fully understand all aspects of the 529 plan within your state, and to consider possibly investing in other states. By talking to your tax advisor, you will be able to determine whether it is best to invest in the 529 plan of your own state or to contribute to an account run in a state with no income tax, and therefore no gift tax.

You should also know what benefits you may be losing if you do choose to go this route, as most states offer incentives for those who use their own state’s program. By knowing all this information, you will be able to understand how the gift tax laws will affect you and your beneficiary, and you can make the best choice regarding investment for college.

Keep in mind that the amount of research involved in finding the best college savings plan may be equal the research needed in finding the best school in which to use those funds. Spending as much time as necessary doing the research can literally pay off in the end.

Why Prepaid Tuition Plans May Not Be So Great These Days

Face the college educations are expensive and not everybody is cut out to attend college. However, there are many advantages to saving for your child's college tuition today. Many parents turn to the prepaid tuition plans that are so popular. When you use a prepaid tuition plans such as the 529 college savings plan, you essentially lock in today's college tuition prices to be used tomorrow.

When your child is ready to attend college. When you consider the inflation rate and how fast college tuition prices are rising as may not seem like a bad idea. However with anything there are pros and cons to investing in pre-pay college tuition plans. Here in love and why prepaid tuition plans may not be so great.

The 529 prepaid college tuition plans allows you to lock in the cost of a future college education at today's prices. While this sounds quite good when you consider the high prices of college. You have to take a look at the ins and outs of the prepaid tuition plans. Most of these plants will allow you to make a lump sum investment or will allow you to pay and out in monthly installments.

Some states have them in some do not. You must also remember that not all colleges and universities will accept the 529 prepaid college tuition plans. Most public state universities will, however, if your child chooses to go to a private college or university, you may be out of luck.

One negative side to choosing a 529 prepaid college tuition plan is that if your child chooses to go to an out-of-state college work to a private school. You may be entitled to use the credits that you will have to pay the difference in tuition prices. You certainly want with much as you would hate to not say. But you know that private schools, an out-of-state tuition can be quite pricey.

It is also think about what would happen to your savings plan, if your child is not admitted into a state public school. You have several options here, but you must research them carefully. Sometimes you can transfer the funds to any other child or into a separate 529 savings plan.

You may also use the credits that you have saved in the past to pay tuition at a community college. You'll need to look at your plan very carefully. Some of these plans pay for only tuition. They will not include other important expenses such as room and board and books. These prices will add up quickly, if you're not prepared for them.

When you choose to invest in a 529 college tuition prepaid plan, you must do so with caution. There are many things that you may not understand about his plans to speaking to someone who is experienced with these college savings plans is a must.

You also should think about your tax bracket and what you can do to save your child, the problems of tax when cashing in their prepaid tuition plan. Cash contributions are allowed when you have a 529 college tuition prepaid plan.

You can contribute up to $12,000 per year to this type of college saving plans without worrying about the taxes. If you are the owner of the account, you can do this for each child in your family. Anything after that may be taxed at a high rate, so getting expert financial advice is a must for any family.

If you have a child, then you need to start researching your college funding options now. Take the time to do your research so that you can make the right investment now and for your child’s future.

The 529 College Savings Plan as an Estate Planning Move

Let’s take a brief look at the 529-college savings plan as an estate-planning move. A 529 plan is not merely just a great vehicle to fund your child or grandchild’s future. A 529 plan is an excellent tool to remove money from your taxable estate. This will assist you in lowering your tax liability and keeping intact more of your estate for your loved ones once you pass.

All 50 states and the District of Columbia now offer some type of 529 savings plans. A 529 plan is a state sponsored savings plan that invests money on behalf of beneficiaries. The earnings are tax deferred from federal income tax and most states have programs that will defer state taxes. If your beneficiary uses the money from this fund for any qualified education purpose, the withdrawals will be free of tax.

There is a lot of competition between states that has lead to very large contribution limits. This is good news for you as you plan your estate. 529’s have extremely simple investment options- age based and individual portfolios. Basically, these college savings plans afford the family the ability to transfer wealth from generation to generation, free of income, estate and gift taxation.

So what makes a 529 college savings plan so attractive to an estate planner? They do not have any income limits unlike the educational IRAs. Almost everyone can qualify for a 529. And if you’re looking for a way to reduce your estate tax bill, this is a great solution.

Take advantage of $11,000 in annual tax-free gift contributions. If you’re married that means you can contribute up to $22,000 for each beneficiary in one year. This is free from federal gift tax penalties. It is advisable to look into your state laws on gift planning for 529’s as they vary.

If you need to reduce the size of your estate you could contribute up to $60,000 (five years worth of gifts) in year one of a five-year period. Or if you’re married you can contribute up to $120,000. This is a good resource to transfer wealth by reducing the size of your estate and do away with estate taxes.

The account owner is always in charge of the plan’s assets. Even though the monies added are considered gifts, the owner does keep control. The donors can even take back the money for themselves or transfer the account to another beneficiary. If the owner of a 529 account were to die, the value of the account would not be counted in the estate.

The account value would be in the beneficiary’s estate. The exception to this would be if you had made the 5-year election and passed before the 5 years was over. Then, the part of the contribution that was assigned to the years after your death would be included in your federal gross estate.

It is also very easy to move the money in an account through 529 rollovers or by changing your beneficiary. If you have a need to distribute your estate, you can set up 529 plans for a large array of family members. This includes children, siblings, grandchildren, uncles, aunts, stepfamily, cousins and so forth.

If you need to transfer wealth, look into 529 plans as part of your estate planning strategy. At the very least, the 529 college savings plan, as an estate-planning move is something to discuss in more depth with your tax professional. This is an extremely generous gift for your beneficiary. Imagine the reward of knowing you've provided someone with the gift of an education.

Getting Past Contribution Limits for 529 College Savings Plans

There are a few major investments that almost every family faces – cars, homes, and of course, college educations for the children. The importance of having a college degree seems to grow every day, but unfortunately, the cost of attending college seems to grow right along with it.

In fact, the cost of attending college is downright prohibitive for some families, and there is no reason to think that this situation will improve any time soon, and every reason to think it will actually get worse. What can you do if money is tight, but you want your child to have access to an education that will help them succeed in the job market?

Scholarships and grants help some families, but they seldom foot the entire bill, and student loans can be an expensive burden to saddle onto your child on graduation day. Another problem with all of these college funding options as well is that it is impossible for you to know if you are getting them until your child is actually ready to enter college.

You can’t wait that long to plan for education financing if you want your child to be able to attend the college of their choice. So, what is a hard working family to do to ensure that they will have the money to put their kids through school? A 529 savings plan can be a great option.

A 529 savings plan is a state run savings account that lets you save money for your child’s education and gives you a tax break for doing so. Anyone can contribute to your 529 savings plan, so if grandparents and the extended family want to help save, they can do so.

Some 529 savings plans function just like normal saving accounts, while others pre-paid accounts for schools that let you pay the tuition of a college in advance.

The idea is that the price you pay today will be significantly cheaper than the price you would pay by the time your child is old enough to attend that school (of course, then you have to hope they want to go there!). These savings accounts allow you to grow your money faster by investing it in the stock and bond market as well.

There is a drawback to these 529 college savings plans, however, and that is the contribution limit. Each state comes up with its own contribution limit, but they generally range from $100,000 to $200,000 per family. That may sound like a lot of money, but is it really?

Would it be enough if your child wanted to attend an Ivy League or private university? Would it be enough to give several children room, board, books, and tuition at even a public state school? If you are facing either of these scenarios, you need to find a way around the contribution limit on these accounts. There are a few things you can do.

You can have relatives set up separate accounts instead of contributing to your account, and you can have accounts in multiple states. You can put your money into different types of accounts – one pre-paid and one savings – for your children. You can also have each parent start an account, if they are unmarried.

The most important thing to remember about starting all of these accounts and getting around the contribution limit is that you will need to understand the tax implications for each account. If you have accounts in different states, each state’s own tax laws will apply to each account.

Each account holder will be responsible for reporting contributions to their own account. All of this extra work may be worth it in the long run, though, so your child does not have to worry about finances will working on their degree.

What Contributing Grandparents need to know about 529’s

What exactly should grandparents need to know about 529 college plans? Some things just seem to go together like hot dogs and baseball, peanut butter and jelly, and of course, grandparents and 529 plans.

It’s a very lucky family that can depend upon grandma and grandpa to help with college tuition bills. College expenses aren’t exactly shrinking. The best gift that anyone could give could be your grandchild’s education fund and a 529 plan is a great way to get started.

A 529 plan is a state sponsored savings plan that invests money on behalf of beneficiaries. The earnings are tax deferred from federal income tax and most states have programs that will defer state taxes. If your grandchild uses the money from this fund for any qualified education purpose, the withdrawals will be free of tax.

Grandparents are allowed to contribute up to $11,000 per year per grandchild. So if Grandpa and Grandma have two grandchildren could place up to $44,000 in funds for the grandchildren without any gift tax liability. The grandparents would each have to set up 2 funds for each grandchild (a total of 4).

Grandparents will still have control over these funds and can retrieve the money if needed. Of course, there will be taxes and penalties on an unqualified withdrawal but the taxes and penalties will only be on your earnings, not on the amount of the original contribution.

The 529 plans have lots of investment options, which create a big decision for the grandparents to make. Grandparents typically are more conservative than the child’s parents. The most popular approach to 529 investments tends to be the age-based option. This is a simple way to save for college. You do not have to personally adjust your allocations over time.

The fund is managed according to the age of your grandchild. Younger children have more of a stock concentration. As your child gets older, the assets are automatically shifted into a higher ratio of short-term investments and more stable bonds.

Grandparents could also check and see if the 529 plan that your have set up will accept a third party contributions. This will take all of the worry about opening and maintaining your own accounts. State tax deductibility may be an issue if you go this route. Some states allow you a deduction for at least part of your contribution to their 529 plans. As a third party donor you will not be eligible for this deduction.

If you ever need to apply for Medicaid benefits, the state will look at your 529 plans as countable assets. You are eligible to take back the money you’ve invested so the money is technically available to pay medical or nursing home expenses. If you have this concern, it is an issue to discuss with your tax professional or attorney. It might be a good idea to make someone else the owner of the fund.

A big concern for grandparents is what would happen to the money in the 529 accounts if your grandchild chooses not to attend college. A great option is to change the beneficiary to another family member or even yourself. You can change the beneficiary as much as you want.

Another option is to take the money in the fund for your needs. The earnings in the account will be subject to a 10% penalty rate and will be taxable as income.  This is some of what contributing grandparents need to know about 529’s. It is a great way to invest in your grandchild’s future. You have picked an incredible gift to give to your very lucky grandchild.

Roth IRAs – A Viable Option for College Funding?

Lately, there has been much confusion regarding the benefits of using a Roth IRA to finance a college education on a tax-free basis. This is due to the complexity of rules on taking distributions/withdrawals from Roth IRAs. There are two kinds of money in a Roth IRA: contributions and earnings. Unlike a traditional IRA, contributions to a Roth are never tax-deductible.

Since taxes have already been paid taxes on the contributions, these can be withdrawn at any time, for any reason, without paying taxes, although they may be subject to the early 10% withdrawal penalty if they come out of a Roth within five tax years. Fortunately, that penalty is waived if the contributions are used for higher education expenses such as going to college.

The same can be done with non-deductible contributions made to traditional IRAs. But, the money earned by those contributions, such as capital gains, interest and dividends is untaxed money. Untaxed money cannot be taken out without paying income tax on it until the age of 59 1/2 or older. There are some exceptions to this rule, but unfortunately higher education is not one of them.

If the earnings are withdrawn from a Roth, they are taxed at ordinary earned income rates, not the more favorable capital gains rates. Don't even think about using Roth earnings for college. A person would be far better off with a taxable account. However, a person can use Roth contributions for college.

This option is viable only if the individual has some other type of retirement plan that is funded to satisfactorily.  Obviously, the individual’s future support should come first, and the individual’s children can work their way through college. Thus, as long as the Roth isn't all that stands between a person and a mediocre, poverty ridden retirement, then yes, the Roth has some potential for college funding.

Nobody will lend an individual money for a comfortable retirement, but a student can borrow money for college. The point of saving for college is to hopefully avoid the need for a student to borrow.

But bumps in the financial road do happen sometimes, and the bottom line is that if it comes down to an either/or situation, it's more important that there is a reasonable level of retirement savings more than large college savings fund.

As far as the tax advantages are concerned, a person might as well hide the money under a mattress. The individual is simply putting some money, on which taxes have already been paid, into the Roth for a while, then taking it back out and using it to pay for college.

No taxes are paid on that kind of withdrawal just like a person wouldn't pay taxes on withdrawals from a savings account, or money you stashed in a coffee can. The tax advantages of saving for college in a Roth is good. While a person will not get tax-free treatment on earnings saved in a Roth if used for college, the contributions can be withdrawn for college expenses without tax or penalty.

The obvious solution is to leave the earnings in the Roth for retirement and withdraw the principal to pay college bills. There is some flexibility in using a Roth IRA, but here are also yearly contribution limits for the Roth, with the annual limit for the Roth IRA increasing to $4,000 in 2005, a married couple will be able to save a full $8,000 per year in Roth IRAs.

Many families with kids aren't going to be able to save more than that anyway, and if they can, the Coverdell accounts are still available to save an extra $2,000 per child per year. The treatment of college funding is often confusing, it is sufficient to say that having college savings money held in a Roth IRA can simplify the treatment of financial aid and education tax credits.

The Pros and Cons of the Coverdell ESA for College

As you’re setting up investment plans for your child’s college, it’s smart to be aware of the pros and cons of the Coverdell ESA for College. This educational savings account is a very attractive savings plan for many people. Let’s take a look at some of the negatives and positives of this program and so you can see if it’s a fit for you.

Pro- The Coverdell Education Savings Account can be self-directed with a wider array of investment products available than a 529 plan. The account can be placed in almost any sort of investment. Typically, stocks, bonds, bank CDs, mutual funds and unit investment trusts. No part of trust assets may be invested in life insurance contracts.

Pro- The Coverdell funds are available to finance elementary and secondary school, not just college. This includes items such as tuition, fees, tutoring, books, supplies, room and board, uniforms, transportation and computers.

Pro- Earnings accumulate tax-free. Qualified distributions are exempt from federal income tax. Please note that contributions are not deductible on federal or state income tax.

Pro- Corporations may contribute. This even includes tax-exempt organizations. Regardless of income level, corporations may contribute to an individuals Coverdell account.

Pro- People can contribute to both a Coverdell account and a section 529 plan in the same year. Note that there may a gift tax implication if you give more that $12,000 per beneficiary.

Con- Contributions to the Coverdell ESA are limited to $2000 per beneficiary per year. Here’s an example, you have a son and a daughter that you want to contribute $3500 into Coverdell accounts for. You deposit $2000 to your son’s account and $1500 into your daughter’s.

Their grandmother wishes to add another $1000 but she is only allowed to put $500 into your daughters account as the $2000 limit has been reached. At $2000 a year, it would be tough to have this be your entire college savings plan.

Con- Contributions can only be made until the beneficiary reaches age 18. This may be a non-issue with some families but a 529 plan would allow you greater flexibility. There are no age restrictions for special needs beneficiaries.

Con- The money must be used by the time the child reaches the age of 30. If the funds are not used, the earnings will be taxed as ordinary income plus a 10% penalty.

Con- There is less flexibility in changing beneficiaries in a Coverdell ESA. Coverdell plans are considered permanent gifts. You cannot open up an account for your child and take back the money for your own use. Typically, the parents are responsible for the account until the child reaches 18. Then, the beneficiary usually takes control of the account. There is some ability to change beneficiaries.

Con- The Coverdell ESA is not eligible for the state tax deductions available for some 529 plans. The available 529 state tax deductions vary from state to state. Of course, a tax deduction is not the only reason to select an investment.

Con- The contribution limit is phased out for contributors with an adjusted gross income between $95,000 and $110,000 for single people and between $190,000 and $220, 000 for joint filers. A clever way around this con if you’re in this income bracket is to give the money to your child and let her open a Coverdell for herself.

After looking at the pros and cons of the Coverdell education savings fund, you can see if this is a wise investment for your child. The items that have been identified as cons are non-issues for many people. Coverdell is a good investment overall for most families. Talk with your tax profession and see if it’s right for you.

States that Come Close to the 5-Cap Rating with 529 Plans

As your looking at plans, it’s a good idea to know about the states that come close to 5-cap rating with 529 plans. Let’s face it, the smartest thing you can do is pick the very best plans for your money. Ratings are assigned to each states program ranging from 1-cap (not very attractive) to 5-caps.

The cap system is based upon opinion and is not a formula. Different people might weigh these items differently. Case in point, some plans have different age requirements that affect their ratings. If your child meets these age requirements, this would be a non-issue.

The cap rating system prefers 529 plans that are flexible. You want a plan that easy rolls over to other state plans with no penalties and gives you freedom to change beneficiaries. It’s best to be able to have high maximums and low minimums with wide eligibility for owners and beneficiaries.

When it comes to liquidity and availability, you want to be able to use the account immediately for college expenses. It needs to be easy to deposit and withdraw from the account. Also, the ability to take out monies for items other than education without the account being closed is important.

To score high caps, the owner should be in control of the account. This means their ownership rights include being able to transfer ownership at any time and be able to name a new beneficiary in case of death.

The states that score the most caps back up their programs with additional state level benefits. In these states, there are things like state tax deductions for contributions and exemption for college used earnings. You may find exclusion of 529 accounts when you are applying for state financial aid. And of course, some states offer some great extra perks like loan programs and matching grants.

Another important scoring point is the state’s approach to investments and safety. The name of the game is lots of choices. It’s great to find well-designed investment plans and high rated portfolios. Low fees and expenses as well as age-based discounts on pre-paid tuition are key. The 5-cap states guarantee of pre-paid tuition contracts and downside investment protection.

Program resources need to have thorough and complete program materials including web site access. Having a call center is not enough; you need people there that are excited and knowledgeable about 529 plans. Finally, the cap ratings prefer successful efforts to gain favor from the IRS regarding status as a 529 plan.

The 5-cap rating is not based solely on historical returns. It does not predict the risk levels or predict future investment performance or how solvent the program funds are. This is just a measure of how useful the state’s 529 plan is based on the discussed factors.

The 5-cap programs offer great flexibility, attractive investments and benefits such as state tax breaks. These factors can add volume to your savings. In the 5-cap program, you will find very few weaknesses. Even a program rated 3-cap offers some very good benefits but may have some concerns that you need to research.

Now that you are refreshed on the positive aspects of the 5-cap rating, which states come close? The eight having plans for residents that are rated 5-cap are Alaska, Maryland, Michigan, Ohio, Rhode Island, South Carolina, Utah and Virginia.

Honorable mention should go to the 4-½ cap states of Colorado, Connecticut, District of Columbia, Georgia, Illinois, Indiana, Iowa, Louisiana, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, New York, Oklahoma, Oregon, South Dakota, Vermont West Virginia and Wisconsin. Now that you know which states come close to the 5-cap rating with 529 plans, perhaps you can invest with just a bit more wisdom.

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