Investment research firm Morningstar has released their annual 529 College Savings Plans Research Paper and Industry Survey. While the full survey appears restricted to paid premium members, they did release their top-rated plans for 2016. This is still useful as while there are currently 84 different 529 plan options nationwide, the majority are mediocre and can quickly be dismissed.

Remember to first consider your state-specific tax benefits that may outweigh other factors. If you don’t have anything compelling available, you can open a 529 plan from any state (although I would only pick from the ones listed below). Also, if you grab some tax benefits now but they are discontinued later, you can roll over your funds into another 529 from any state.

Here are the Gold-rated plans for 2016 (no particular order). Morningstar uses a Gold, Silver, or Bronze rating scale for the top plans and Neutral or Negative for the rest.

• Vanguard 529 College Savings Plan, Nevada
• Utah Educational Savings Plan
• Virginia529 inVEST College Savings Plan

Newcomer Virginia529 inVEST was upgraded from Silver to Gold, helped by a recent management fee reduction. Missing from last year are the T. Rowe Price College Savings Plan of Alaska and the Maryland College Investment Plan (T. Rowe Price), which were downgraded from Gold to Silver. Reasons for this include fees staying average when the competition overall got cheaper, while at the same time some of the underlying actively-managed funds received lower Morningstar fund ratings.

Here are the consistently top-rated plans from 2010-2016. This means they were rated either Gold or Silver (or equivalent) for every year the rankings were done from 2010 through 2016.

• T. Rowe Price College Savings Plan, Alaska
• Maryland College Investment Plan
• Vanguard 529 College Savings Plan, Nevada
• CollegeAdvantage 529 Savings Plan, Ohio
• CollegeAmerica Plan, Virginia (Advisor-sold)

The trend here is consistency. There was no change in either of the lists above as compared to last year. Utah only missed on out the consistent list because they weren’t top-ranked in 2010.

The “Five P” criteria.

• People. Who’s behind the plans? Who are the investment consultants picking the underlying investments? Who are the mutual fund managers?
• Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research? Whether active or passive, how is it implemented?
• Parent. How is the quality of the program manager (often an asset-management company or board of trustees which has a main role in the investment choices and pricing)? Also refers to state officials and their policies.
• Performance. Has the plan delivered strong risk-adjusted performance, both during the recent volatility and in the long-term? Is it judged likely to continue?
• Price. Includes factors like asset-weighted expense ratios and in-state tax benefits.

A broad recommendation is to simply stick with one of the plans listed above unless your in-state plan is offering significant tax breaks. Many other state plans may have specific investments that will work just fine as well. Here are my personal favorites, and why:

• The Nevada 529 Plan for its low costs, variety of Vanguard investment options, and long-term commitment to consistently lowering costs as their assets grow. The Vanguard co-branding is also a sign of positive stewardship.
• The Utah 529 plan has low costs, includes a nice selection of Vanguard and DFA funds, and is highly customizable for DIY investors. Over the last few years, the Utah plan has also shown a history of passing on future cost savings to clients.

I feel that a consistent history of consumer-first practices is important as the quality of all 529 plans can change with time. Sure, you can move your funds if needed, but wouldn’t you rather watch your current plan just keep getting better every year?

The Vanguard 529 College Savings Plan (based in Nevada but open to all state residents) is one of the consistent Morningstar top-ranked 529 plans and one of my three personal finalists when choosing a plan for myself.

While poking around the site, I also came across this interactive map tool that helps you compare your in-state plan with the Vanguard/Nevada plan. Although created by Vanguard, it still offers a lot of useful information and I’m okay with then Vanguard plan being used as a benchmark.

Below is an example screenshot for Utah. Note that it will tell you if you have an in-state tax benefits, and also if that tax benefit is restricted to contributions to your in-state plan only. Where applicable, it also links to Vanguard’s 529 tax deduction calculator. Finally, if you click on “Full Comparison” you can dig even deeper.

As an example of why Vanguard is highly-regarded, I was recently notified that Vanguard once again lowered the expense ratios on many of their 529 investment options. This matches the same trend with their regular mutual funds and ETFs.

Effective May 3, 2016, the expense ratios for all Vanguard 529 Plan investment options went down, affirming Vanguard’s ongoing commitment to lowering costs for our clients. Now you’ll be saving even more. The cost of our age-based options decreased from 0.19% to 0.17%, which is 67% less than the industry average.* And the expense ratios of our individual portfolios dropped from a range of 0.19% to 0.49% to a range of 0.17% to 0.45%.

Here are some similar resources I’ve shared before: 50-state 529 tax benefit comparison (uses a common hypothetical family) and SavingForCollege tax benefit calculator.

Savingforcollege.com is a popular privately-run site for researching and comparing 529 college savings plans. They released their updated ratings this month, which represents their “opinion of the overall usefulness of a state’s 529 plan based on many considerations.” The judgement criteria include:

• Performance. They selected similar “apples-to-apples” portfolios with 7 different asset allocations from each plan and rated them based on historical performance. Rankings are updated each quarter.
• Costs. Total average asset-based expense ratios among plans are compared, in addition to separately considering program manager fees, administrator fees, and annual account maintenance fees.
• Features. This includes other factors that affect participants, including the ability of the plan change their investment options quickly if called for; creditor protection under the sponsoring state’s laws; availability of FDIC-insured options; minimum and maximum contribution restrictions.
• Reliability. The appears to measure the likelihood of a good plan staying a good plan. Do they have experienced program managers? Does the plan have a good amount of assets? What is the quality of the documentation and reporting? How restrictive are the withdrawal and rollover processes?

Here is the full list of 5-Cap Ratings for each state, on a scale of 0 to 5 Caps. Note that there are separate ratings for in-state and out-of-state residents. The following plans received a 5-Cap Rating for in-state residents (alphabetical order):

• California: The ScholarShare College Savings Plan
• Colorado: Direct Portfolio College Savings Plan
• Colorado: Scholars Choice College Savings Program – Advisor Plan
• Illinois: Bright Start College Savings Program – Direct Plan
• Iowa: College Savings Iowa
• Maine: NextGen College Investing Plan – Direct Plan
• Maine: NextGen College Investing Plan – Advisor Plan
• Michigan: Michigan Education Savings Program
• Nebraska: Nebraska Education Savings Trust – Advisor Plan
• Nebraska: Nebraska Education Savings Trust – Direct Plan
• New York: New York’s College Savings Program – Direct Plan
• Ohio: Ohio CollegeAdvantage 529 Savings Plan
• Rhode Island: CollegeBoundfund – Direct Plan
• South Carolina: Future Scholar 529 College Savings Plan – Advisor Plan
• South Carolina: Future Scholar 529 College Savings Plan – Direct Plan
• Utah: Utah Educational Savings Plan (USEP)
• West Virginia: SMART529 WV Direct College Savings Plan
• Wisconsin: Edvest

Out of the 100+ different plans they rated, here are the 4 programs that attained the top 5-Cap Rating for out-of-state residents (alphabetical order):

• California: The ScholarShare College Savings Plan
• Maine NextGen College Investing Plan – Direct Plan
• New York’s College Savings Program – Direct Plan
• Ohio CollegeAdvantage 529 Savings Plan

Consistently top-rated plans. The last time I noted these rankings was 2012, and the following plans were 5-Cap rated back then and also now: California, New York, and Ohio.

I should point out that the SavingForCollege Top-rated 5-Cap plans are different than the Morningstar Top-rated Gold plans. In fact, there is no overlap at all! Two of my favorite Gold-rated plans, the Vanguard 529 Savings Plan (Nevada) and Utah Educational Savings Plan received 4.5 out of 5 Caps, although I am not exactly sure why.

However, in general the top 15 or so plans are pretty much the same for both. With that in mind, I see nothing wrong with most Morningstar Silver Plans and/or the 4.5 Cap SavingForCollege plans, if their investment options meet your needs. Here were my personal finalist 529 plans and asset allocations.

Finally, here is another resource about comparing the state-specific tax benefits that may be available to you.

The government just passed the Protecting Americans from Tax Hikes (PATH) Act of 2015, which had a few notable provisions for 529 college savings plan participants. Some of them need to be taken advantage of quickly.

• Laptops, computers, and related technology and services are now a qualified higher education expense. As defined by the new IRS code, this includes peripheral equipment, computer software, and internet access. They must be purchased for use primarily by the beneficiary of a 529 college savings plan during any years the beneficiary is enrolled at an eligible educational institution. Previously, certain computer purchases counted only when they were explicitly required by the school for course enrollment.
• You are now allowed to re-contribute qualified withdrawals from a 529 plan that are later refunded by an eligible educational institution into a 529 plan without tax penalty. For example, you may receive a tuition refund after leaving school due to sickness or other reason. Except for a special case for 2015 (see below), you have 60 days from the date of the refund to redeposit the money.
• Accounting rules were updated to eliminate distribution aggregation. This mainly eases burdensome recordkeeping requirements for plan administrators. Hopefully this will lead to lower administrative expenses for accountholders.

All of these actions are retroactive to January 1, 2015. So if you’ve already made a qualifying computer, software, or internet access expense in 2015, you can take out some more money tax-free. You must initiate this withdrawal by December 31, 2015.

Account owners who received a refund of Qualified Higher Education Expenses between January 1, 2015, and December 18, 2015, the date the law was enacted, have until February 16, 2016 — 60 days from the enactment date for the PATH Act of 2015 — to redeposit the money. Account owners who receive a refund of Qualified Higher Education Expenses on any date after December 18, 2015, have 60 days from the date of the refund to redeposit the money.

Qualified expenses for 529 plans still include tuition, fees, textbooks, supplies and equipment. Room and board also counts up to the greater of (1) the school’s official housing cost estimate or (2) the actual cost of school-operated housing. In all cases, keep good receipts and/or documentation.

The American Opportunity Tax Credit was also made permanent. This provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses on up to 4 years of post-secondary education, and increased the phase-out limits to $80,000 (single) and $160,000 (married filing jointly) of modified adjusted gross income.

Sources: CollegeAdvantage, Kansas City Star, UESP e-mail to accountholders.