Thanks for the responses. I wasn't aware you could change between plans and asset allocations once a year. Does that mean I could change- for example - from one state sponsored plan to another once a year, as long as the benificiary stays the same?
I'll try to better explain my point about performance information. I understand that a lot of these 529 plans use new funds (2-4 years old) and thus you can't get long term historical results to rely on. I also understand that the last two years performance is going to skew downward any results. However, my point is several-fold:
1) Mutual fund companies are phenomenal marketers, but the sad truth is only a small % of the funds beat their relative indices over a long period of time. Most of the good financial advisors will tell you to invest in only those funds with above indice long term (10 years +) type returns. There are plenty of funds that meet this criteria - in the last 5 minutes I've found 15 of them by just looking at data on my Schwab account site and picking up the latest Forbes magazine. The point is that there is terrific, audited, credible data on the historical performance of mutual funds that can act as a very valuable tool when making a decision which mutual fund to invest in. People can choose to ignore this information and invest in what is well marketed or what was hot last quarter, or last year, but they are likely to be dissapointed over the long term - and a 529 plan is long term investment for most.
2) 15-20% type returns form the equity market are probably a thing of the past. But the relative difference between good funds and bad funds will still be wide. Let me give an example: some of the best funds returned 15-20% over the last 10 years, let's use 17.5% as a midpoint and assume capital gains rates are 20%. So if I hold on to a good fund during the life of the 529 plan, I would have an after tax return of 14%. The after tax return would probably be a little less due to taxable distrubutiuons by the mutaul fund, but the good ones are 90% tax efficient, so let's say the after tax return would have been 90% of 14% - or 12.6%.
The best pre-tax return I have found so far from the funds used in the 529 plans I've investigated (I've now reviewed 5 plans that I thought had the best fund managers in them and had a 10 year plus record) is 12.61%, so virtually no after tax difference. Most of the rest of the fund returns in the 529 plans - I've looked into anyway - are much lower, 8-10% over the last ten years and thus having poorly performing funds in a tax free plan leaves me worse off than good funds in a taxable account. This is a shame as it seems that the really good funds aren't being used inside these 529 plans.
3) My main point is that there is not a good, objective analysis that ranks the funds within the 529 plans on a long term return basis (if they have a long historical record). Without this, in my mind, it is just gambling, and with money that is very near and dear to the heart of the investor - their kids college education. What is needed is an analysis that shows the length of time the funds within the 529 plan have been in existence and their return over that period of time and the usual 1,5 and 10 year increments that you see in mutual fund rankings. This type of objective analysis is easy to get from Morningstar, Schwab, or others on the universe of mutual funds. I was hoping this was available somewhere for the 60 plus 529 plans so I could make a decision based upon the facts of not only how well the parameters of the plan fitmy family's needs, but also based upon historical returns. I guess the answer is I need to do this analysis on my own by finding out those 529 plans that do have funds with long term track records and then getting info on the returns of those funds elsewhere. If anyone know s someone who has already done this, let me know as I'd pay for that objective information.
Thanks again for your response.