Saturday, April 10, 2010

Why we chose our 529 Plan?

Because our state does not provide any tax benefit for 529 contributions, the high fees associated with our state's plan (broker-sold) made it a poor option. Since I wanted a low-fee plan, I looked at Vanguard, USAA, and Fidelity. Vanguard has some great plans; however, they had account maintenance fees and requirement for a large initial investment. USAA's plans were OK, but not great. Ultimately, we went with Massachusetts's 529 U.Fund Plan for the following reasons:

  1. Since they are not broker sold, we don't have to pay any load to investment advisors.
  2. The overall fee structure is competitive. In particular, they do not charge an account maintenance fee;
  3. I like the investment options;
  4. We have accounts at Fidelity and their service has been very good over the years; and
  5. Our Fidelity Amex Card earns us 2% Cash Back which I will direct into the fund.

We started our fund with $500 and a $50 per month investment.

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