Do the Tax Benefits of 529 Plans Outweigh Their Higher Costs?
Three case studies demonstrate that the benefits are greatest to higher-income families who live in states with generous 529 tax deductions.
Note: This article is part of Morningstar's October 2013 College-Savings Boot Camp special report. This article originally appeared Aug. 27.
Many families want to save for college, but untangling the tax benefits associated with 529 college-savings plans can be difficult. Families might have an especially hard time weighing 529 investments' higher expense ratios with their tax-free investment gains and state income tax benefits.