Is your 529 college plan one of the four with Morningstar gold?

Improvements to some plans include lower fees and an added layer of investment consultants

Oct 20, 2015 @ 3:39 pm

By Liz Skinner

Four college savings programs took home the gold from Morningstar Inc. in its latest review of 529 plans — the same four that ran away with the top rankings last year.

The top spots went to Alaska's T. Rowe Price College Savings Plan, managed by T. Rowe Price Associates; Maryland College Investment Plan, managed by T. Rowe Price Associates; Nevada's Vanguard 529 College Savings Plan, managed by Ascensus; and Utah Educational Savings Plan, managed by Utah Educational Savings Plan.

This year two plans scored negative ratings from Morningstar, which said it believes a flaw exists within those plans that is likely to hurt future returns, such as high expenses or turmoil with the program manager.

Those two plans include Arizona Ivy Funds' InvestEd 529 plan managed by Waddell and Reed and South Dakota's College Access 529 managed by Allianz Global Investors.

FIVE UPGRADES

Five plans were upgraded this year. Three of those “meaningfully reduced fees,” said Leo Acheson, Morningstar's lead researcher for college savings plans. Some plans made other improvements over last year's rankings.

“Many states have partnered with asset managers that are strong stewards of capital and a number of states have hired an investment consultant to provide an additional layer of oversight,” he said.

(More: Fears about rising college costs present an opportunity for advisers)

In good news for the college savings plan American Century Investment Management manages in Kansas, called the Schwab 529 College Savings Plan, it moved up out of the negative rank to neutral this year.

Only one plan was downgraded his year, the USAA College Savings Plan in Nevada, which is managed by Ascensus. It moved from bronze to neutral, Morningstar said.

The five factors that Morningstar takes into consideration are the investment people involved with the plan, the investment strategies, the program manager, the plan's performance history and outlook, and the cost of the investment options.

(More: 529 plans adding more conservative investment options)

The ratings company analyzed 63 of the nation's largest college savings programs and said seven earned a silver rank, 18 a bronze rating and 32 a neutral ranking. All 29 ranked above neutral are predicted to outperform peers over at least five years.

Nationally, about $258 billion is invested in 529 plans, according to data from the College Savings Plans Network last month. The tax-advantaged education savings accounts gained their name through the Internal Revenue Service code that created them in 1996.

0
Comments

What do you think?

View comments

Recommended for you

Reporter Ryan Neal discusses how investors inside and outside financial advice have become interested in the industry's technology, and introduces us to some top people fueling the trend.

Video Spotlight

Recommended Video

Channels

Latest news & opinion

Robos with the best and worst portfolios over the last two years

Schwab tops latest Robo Report showing performance of seven digital-advice portfolios.

Super Bowl of financial scams that hit NFL players

Big paychecks often attract unscrupulous financial advisers to the National Football League, resulting in a long list of high-profile financial implosions, many of which end up in court.

Funds that missed the January rally — some by a little and some by a lot

Here are 10 funds that whiffed when at bat against the S&P 500 index, and why they struck out.

LPL Financial signs up 953 NPH advisers and $34.4 billion in assets

Broker-dealer says it is on track to bring over 70% of NPH revenue as part of its acquisition.

Treasury market pummeled in its worst January since 2009

'Melt-up' of yields pushes 10-year to 2.74%, its highest level since 2014

X

Hi! Glad you're here and we hope you like all the great work we do here at arjuna-design. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting arjuna-design.com? It'll help us continue to serve you.

Yes, show me how to whitelist arjuna-design.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Last News

1099 r reporting franklin us government securities fidelity and vanguard credit card visa hack average salary of cfp hud mip pension plan buyout calculator cfp internships fidelity us dollar bond fund vanguard admiral 500 index aaron acceptance loans 401k how to invest taking lump sum from pension early t rowe price new era fund what are social security spousal benefits reverse mortgage good or bad idea le rosey château de rosey in rolle switzerland how to calculate mortgage interest tax deduction cashing out life insurance policy tax implications when is a 1099 r issued how much is the 1943 penny worth good cheap stocks to invest in cost of filing taxes with h&r block divorced spouse social security survivor benefits american equity lifetime income benefit rider great west bond index fund i t rowe price mutual fund performance form 5329 exception codes how do i claim rental income on my taxes is a life insurance payout taxable income franklin templeton global bond 1985 ferrari 288 gto price defaulting on 401k loan t rowe price calculators can you file taxes if you get ssi phoenix life and annuity company fidelity college savings plan fidelity net benefits international