Arkansas GIFT Plans Earns Four of Five Stars

In its June issue, Mutual Funds magazine rated the 57 “Section 529” college savings plans throughout the nation. Some states have several options, but others, such as Texas, don’t even have a plan yet.

A five-star rating is considered best. Arkansas’ GIFT College Investing Plan received a four-star rating for both residents and nonresidents who want to save money through the program.

But we noticed that of the 57 plans listed, GIFT’s 1.98 percent management fee was the highest in America by 28 basis points. The good news is several of the next priciest funds come with loads, such as New Mexico’s Scholar’s Edge plan through Oppenheimer Funds which charges 1.7 percent. So when it’s all said and done, Arkansas’ is probably just among the nation’s most costly plans.

Nineteen states got a five-star rating, including Arkansas neighbors Oklahoma, Missouri and Mississippi.

The real news, of course, is the many Internal Revenue Service Tax Code changes that have made withdrawals from Section 529 plans tax free when they’re used for education.