Best Virginia 529 Plans in 2023 - MagnifyMoney

Best Virginia 529 Plans in 2022

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As a Virginian, you’re lucky when it comes to finding the best Virginia 529 plan: The list of options is a mere two plans long.

You can choose from Invest529, the official state-sponsored 529 plan, or American Funds’ CollegeAmerica 529 savings plan, managed by Capital Group. If you’re looking for a prepaid tuition program, Virginia permanently closed theirs to new enrollment in 2019.

However, you’re in luck because Virginia has one of the highest aggregate limits for all states for a 529 plan. With both of the plans listed above, your maximum aggregate contribution tops out at $550,000 per beneficiary as of 2022. If you’re also a Virginia resident, you can deduct up to $4,000 in contributions on your state taxes per year, too.

Virginia 529 college savings plans

Program typeAdvisor-soldDirect-sold
Maximum fund amount$550,000$550,000
Minimum deposit amount$250 ($1,000 for American Funds U.S. Government Money Market Fund)$10
Residency requirementsNoneNone
How to enrollContact an authorized financial professionalFill out an online application

CollegeAmerica 529 plan – Virginia

Fueled by American Funds, the CollegeAmerica plan gives Virginians a tax-advantaged way to save for future educational expenses. Not only can you use this plan for colleges in Virginia, but it’s also a nationwide plan that can be used far beyond the Virginia state line.

Investment options

With the CollegeAmerica plan, your investment options include:

  • American Funds Target Date fund series (7 different funds)
  • American Funds Portfolio Series (6 pre-built portfolios)
  • Individual mutual funds (33 funds)

Additional plan information

Up to $500,000 total can be invested per student in any one or a combination of the state’s 529 plans. Accounts are sold through financial professionals, who then help people select investments and manage the account.

While there are no enrollment or maintenance fees for the CollegeAmerica plan, each fund comes with its own annual asset-based fees which range from 0.42% to 1.96%.

  • Class A funds: 0.43% – 1.20%
  • Class C funds: 0.43% – 1.96%
  • Class E funds: 0.42% – 1.36%
  • Class F-1 funds: 0.66% – 1.20%

Some funds charge sales fees as well. It’s important to talk with your advisor to ensure you fully understand the fees you’ll be paying.

Invest529 plan – Virginia

Invest529 is another option for Virginia families looking for a way to save for college in a tax-advantaged way. You can save while living in Virginia and then use funds at any qualifying school nationwide, including for K-12 education.

Investment options

You’ll have five main portfolio types to choose from with the Invest 529 plan:

  • Target enrollment date/age-based portfolios
  • Principal protected portfolios
  • Target risk portfolios
  • Specialty ESG and global equity portfolios
  • Index portfolios, which are essentially index funds

Additional plan information

You can easily open an account online and won’t find any fees to open or maintain your 529 savings account. However, there are expense ratios and other fees involved, which vary depending on the fund or portfolio you choose. Annual fees range from 0.00% to 0.71%.

Which Virginia 529 plan is best?

Best for those who...Drawbacks
  • Seek investment variety
  • Want help from a financial advisor
  • Are Virginia residents
  • Higher minimum investment
  • Higher fees
  • No state tax deduction for non-Virginia residents
  • Want to set up and manage their own account
  • Are interested in lower fees
  • Are Virginia residents
  • Fewer investment options
  • No state tax deduction for non-Virginia residents

While both of Virginia’s 529 plans offer the same state and federal tax benefits, CollegeAmerica funds typically come with higher fees. While asset-based fees for CollegeAmerica can climb beyond 2% plus sales charges depending on investments selected, the fees for Invest529 are more modest, with asset-based fees reaching no higher than 0.71%. The tradeoff for CollegeAmerica’s higher fees, however, is the assistance of a financial advisor to help you set up your account, select investments and manage your account over time.

Can’t decide between the two? It’s no problem — Virginia taxpayers can contribute to multiple 529 programs for a single beneficiary, as long as the total contributions to all 529 plans don’t exceed $550,000.

Tax benefits of Virginia 529 plans

Ninja Column 1Ninja Column 2
Maximum annual state deduction (Virginia state 529 accounts)Singles: $4,000 per account Joint filers: $8,000
Maximum annual state deduction (non-Virginia state 529 accounts)Singles: $0 Joint filers: $0
RequirementsMust be a state resident

Virginia taxpayers who contribute to either of Virginia’s state 529 plans can claim a deduction of up to $4,000 per account yearly on their state taxes. Those aged 70 and older can deduct the entire amount they contribute each year. However, Virginia taxpayers who contribute to 529 plans outside of Virginia don’t receive a state tax deduction.

Money within any 529 plan grows tax-free, and withdrawals aren’t taxed as long as they’re used for qualified expenses — such as tuition, books, fees and room and board — at an eligible institution, which includes schools both across the U.S. and around the world. If the funds are not used for qualified expenses, you’ll owe income tax plus a 10% federal tax penalty on the earnings portion of the money you withdraw.

Attending an out-of-state school

Funds in Virginia’s 529 plans can be used at any eligible school in the United States or abroad. You receive the same state tax benefits no matter where the school is located, as long as you’re a Virginia taxpayer.

Rolling over a Virginia 529 plan

Yes, you can roll over your Virginia 529 to another state’s plan, though you can only do so once every 12 months. However, you should also note that if you’re still a Virginia taxpayer, you won’t be able to claim a state tax deduction on contributions to another state’s 529 plan.

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