I've decided on a college savings plan, but how do I go about choosing one?


Most college savings plans let nonresidents join, so you have quite a few options. In choosing a particular college savings plan, there are many factors you should consider.

First, because you're entitled only to the state tax benefits (if any) offered by the state in which you reside, it's always a good idea to look at your own state's plan first (assuming your state offers one) and research what state tax benefits are available. For example, some states exempt a plan's earnings from income tax if used to pay qualified education expenses, similar to the way the federal government exempts such earnings from tax. Some states may also let you deduct some or all of your contributions in a given year, or they may match a portion of your contributions. Remember, if you join another state's plan, you won't be entitled to any state tax benefits offered by that state.

Another important factor to consider is a plan's investment choices. Some plans may restrict you to a certain portfolio based on the beneficiary's (child's) age, while others may let you choose a portfolio that's more or less conservative than this age-based portfolio. You may also want to look at the past investment performance of a particular portfolio and compare it with other similar portfolios in different plans.

Also check to see if the plan lets you change the investment option you've chosen for your existing contributions twice per calendar year, something that plans are permitted to do under federal law. Find out, too, whether the plan allows you to direct future contributions to a different portfolio in the plan.

Finally, you may want to compare fees and expenses among plans. Also, the reputation, experience, and track record of the state's designated agent who will manage the plan are important. Customer issues like the ease with which you'll be able to make contributions and otherwise manage your account are important factors, too.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in each issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.

If you are investing in a 529 plan outside of your state of residence, you may lose available state tax benefits. Make sure you understand your state tax laws to get the most from your plan.

529 plans are subject to enrollment, maintenance, administration/management fees and expenses. 529 plans are subject to fluctuation in value and market rise, including loss of principal.

Investors should consider the investment objectives, risks, charges, and expenses of 529 plans carefully before purchasing. More information about 529 plans can be found in the issuer's official statement. Please read the official statement carefully before investing.

Please be advised that this materials is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transactions(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent advisor.

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GE 119741 (10/2016)

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