Morningstar recently released its annual list of the five best and five worst 529 college savings plans. Past favorites Utah Educational Savings and Nebraska College Savings dropped out of the top five, not because they got worse, but because other plans got better.
Named after a section of the Internal Revenue Code, 529 plans are state-sponsored programs that provide federal tax benefits for college savings. You can set them up for your children, grandchildren, other loved ones or yourself. States also exempt earnings and qualified withdrawals from state income taxes.
Morningstar's top-rated plans this year are direct-sold plans from Illinois, Maryland and Virginia and broker-sold plans from Virginia and Colorado. Illinois and Virginia are new on the list, replacing Utah and Nebraska.