Jorie Barnett Johnson, the planner in New Jersey, favors the Utah Educational Savings Plan that uses both the state treasurer's fixed-income fund and Vanguard index funds in five different aged-based options whose allocations change as the beneficiaries more toward college enrollment and four static portfolio options whose allocations stay the same. Johnson likes that the Utah plan comes with a lot of age-based allocation models and with a cheap expense ratio (0.25% to 0.37%).
Don't Neglect The Nest Egg
When it comes to saving for college, 529 plans aren't the only option. Other possibilities include Coverdell Education Savings Accounts, Roth IRAs and trusts. But no matter what the option used, clients with great intentions can't let themselves get carried away by shoveling money into college savings accounts at the expense of their retirement accounts.
"You have to make sure they fund their retirement first," says Buz Livingston, a CFP licensee with Livingston Financial Planning in Santa Rosa Beach, Fla. "You can always borrow money to go to college, but you can't borrow money for retirement."