Finding the Lowest Cost 529 Plan

Key facts

  • There is typically no residency requirement to participate in a state’s 529 plan.
  • You can open a 529 account directly from the plan distributor or through a financial advisor.
  • Fees vary between plans based on where and how you open the account.

529 Fees: Purchasing from a Broker vs. Purchasing Direct

Each state administers its own version of the 529 plan, so your options can vary widely when it comes to management methods, fees, and investment choices. As you consider which plan offers the best value based on your needs, you will have to decide between purchasing your plan from a financial advisor or purchasing directly from a plan distributor.

  • Purchasing from a Financial Advisor: Some states only sell their plans through financial advisors, which can be helpful if you prefer the benefit of professional guidance. However, financial advisors charge additional for their services and it’s important to account for fees when making your decision. You may also be charged an annual fee for this type of program.
  • Purchasing Direct: As the name implies, this method of opening a 529 account has you working directly with the plan distributor, but you will be responsible for managing your own investments. Since you don’t go through a financial advisor, you are able to avoid paying the related fees. Direct-purchase plans typically offer a set selection of investments or an investment fund based on your targeted withdrawal date. These plans are less flexible in terms of customizing the assets you hold.

There is a balance between the pros and cons of each option, so choose the one that best fits your needs. The most important thing you can do to increase your savings is to open your account as soon as possible, whether through direct purchase or through a financial advisor.

Comparing 529 Plan Fees from State to State

Going to each state’s 529 plan site to compare features is an overwhelming proposition. Instead, if you are conducting your own research, rely on the expert advice available for free from investment research firms like Morningstar. Online resources can simplify the research process by comparing state-sponsored plans side by side, making it easy to select the program that best suits your situation.


Nothing in this article should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. This article is not intended as investment advice, and Wealthfront does not represent in any manner that the circumstances described herein will result in any particular outcome. Financial advisory services are only provided to investors who become Wealthfront clients.

This article is not intended as tax advice, and Wealthfront does not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Wealthfront assumes no responsibility for the tax consequences to any investor of any transaction. Investors and their personal tax advisors are responsible for how the transactions in an account are reported to the IRS or any other taxing authority.

For information on any 529 college savings plan contact the plan provider for details on the investment objectives, risks, charges, expenses, and other important information included in the Plan Description and Participation Agreement; read and consider it carefully before investing.

Please Note: Before investing in any 529 plan, you should consider whether you or the beneficiary’s home state offers a 529 plan that provides its taxpayers with favorable state tax and other benefits that are only available through investment in the home state’s 529 plan. You also should consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plans’ features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

Earnings on nonqualified withdrawals are subject to federal income tax and may be subject to a 10 percent federal tax penalty, as well as state and local income taxes. The availability of tax and other benefits may be contingent on meeting other requirements.