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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.
| CollegeAmerica | Invest529 | |
|---|---|---|
| Program type | Advisor-sold | Direct-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 requirements | None | None |
| How to enroll | Contact an authorized financial professional | Fill out an online application |
| Plan name | CollegeAmerica |
| Program type | Advisor-sold |
| Fees and expenses | Enrollment fees: $0 Maintenance fees: $0 Asset-based expense ratio: 0.42% – 1.96% |
| Phone number | 800-421-9900 |
| Website | Virginia’s CollegeAmerica plan |
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.
With the CollegeAmerica plan, your investment options include:
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%.
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.
| Plan name | Invest529 |
| Program type | Direct-sold |
| Fees and expenses | Enrollment fees: $0 Maintenance fees: $0 |
| Phone number | 888-567-0540 |
| Website | Virginia’s Invest529 plan |
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.
You’ll have five main portfolio types to choose from with the Invest 529 plan:
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%.
| Best for those who... | Drawbacks | |
|---|---|---|
| CollegeAmerica |
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| Invest529 |
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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.
| Ninja Column 1 | Ninja 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 |
| Requirements | Must be a state resident |
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.
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.
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.
Julie Ryan EvansJulie Ryan Evans is a writer and editor who has covered small business, real estate and personal finance for nearly a decade. She has written for an array of publications, including USA Today, Realtor.com, LendingTree and Debt.com.
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