How a 529 Plan Can Benefit You

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¹While distributions from 529 college savings plans for elementary or secondary education tuition expenses are federally tax-free, state tax treatment will vary and could include state income taxes assessed, the recapture of previously deducted amounts from state taxes, and/or state-level penalties. You should consult with a tax or legal advisor for additional information.

²Unlike a traditional bank account that offers Federal Deposit Insurance Corporation (FDIC) protection, investments in 529 plans are generally not guaranteed, and you could lose money, including your principal, by investing in them. There may be other material differences between savings accounts and 529 college savings plan accounts that should be considered prior to investing.

³List of tax-parity states as of April 2023. If you have questions about your specific situation, please speak with a state tax professional.

⁴This representation demonstrates the difference between hypothetical rate of return in a bank account and a 529 college savings plan account, compounded monthly, but not between any two specific products. This example doesn't represent the return on any particular investment, and these rates are not guaranteed.

⁶Morningstar analysts reviewed 59 plans for its 2024 ratings (10/29/24), of which 5 plans received a "Gold" rating. To determine a plan's rating, Morningstar's analysts organized their research around 4 key pillars: Process, People, Parent, and Price. Plans were then assigned forward-looking ratings of "Gold," "Silver," "Bronze," "Neutral," and "Negative." Each year, certain of the industry's smallest plans are not rated. Click here for additional information about Morningstar's methodology.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar analysts' current expectations about future events and, therefore, involve unknown risks and uncertainties that may cause Morningstar's expectations not to occur or to differ significantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees.

©2024 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

⁷Each quarter, Saving For College analyzes the investment performance figures for thousands of 529 enrollment-based portfolios, comparing the reported investment performance of a subset of portfolios from each 529 savings plan to produce their rankings. As of 6/30/24, the rankings for the T. Rowe Price College Savings Plan were: 3 out of 55, 12 out of 49, 3 out of 36, and 2 out of 24 for the 1-, 3, 5-, and 10-year periods, respectively.

Saving For College compares historical investment returns for all enrollment-based portfolios, including age-based and year-of-enrollment portfolios, within a given age band from 0 to 19+. A hypothetical average annual return is then calculated for each plan's enrollment-based portfolios along a glide path from 0 to 19+, and the plans are ranked from highest to lowest return. There are separate comparisons for direct-sold and advisor-sold plans. More information about the methodology and the performance rankings can be found on savingforcollege.com.

⁸Gift and estate tax issues can be complex; see a tax professional to discuss your situation in detail.