Lower Fees + More Options = Big Changes to Florida 529 Savings Plan

Facebook icon Twitter icon Print icon Email icon
Kathryn Flynn

By Kathryn Flynn

September 23, 2019

Great news for Florida families! Significant enhancements to the State’s 529 college savings plan can add up to big savings for your college fund.

The Florida Prepaid College Board announced important changes to the state’s 529 college savings plan on September 16th, which aim to help Florida families save more for college by offering high-quality investments with competitive fees.

The newly enhanced 529 plan is available exclusively to Florida residents. Non-Florida residents who are currently invested in the Florida 529 Savings Plan will be grandfathered into the enhanced plan.

What’s new?

  • Reduced fees on all investment options, some by more than 70 percent
  • Addition of well-known investment managers such as Vanguard, Dimensional Fund Advisors, and Eaton Vance
  • Expanded investment options, including four new static portfolios

Lower costs to help you save more

529 plan fees and expenses have a direct impact on how much a family is able to save for college. With an extensive overhaul of the Plan’s investment lineup, the Board was able to slash fees and offer a very competitive product to Florida residents.

For example, a family invested in the Plan’s Domestic Equity Index Fund, now managed by Vanguard, would have previously paid 0.39% in fund fees. Now, the Plan is able to charge just 0.02% in fund fees, reducing annual investment costs from $39 down to $2 per year on a $10,000 investment.

What’s more, the $37 fee savings will be invested and grow tax-deferred until it is used for college. The lower your 529 plan fees, the more you’ll be able to save for college, and the less your child will have to borrow in student loans.

Industry-leading investment management you can trust

Florida residents can rest easy knowing that their college savings investments are being managed by some of the top leaders in the industry.

The Plan’s newest investment managers include:

  • Vanguard – Globally recognized for low-costs and superior investment returns
  • Eaton Vance – A long history of providing exemplary service, timely innovation and attractive returns
  • Dimensional Fund Advisors – Expertise in applying academic research and analysis of Nobel Prize-winning economists and other prominent academics to practical investing

The Florida 529 Savings Plan is state administered, and the Board partners with highly qualified industry professionals to make investment management decisions.

New high-quality investment options to suit your needs

The Board also made changes to the Plan’s investment lineup to meet the varying investment needs of Florida families. For example, the Plan has improved its age-based portfolio allocation, which is popular with families who prefer a simple, predesigned approach to investing.

As a child gets closer to college, there is less time to absorb the market fluctuations that come with investing in stocks. An age-based portfolio allows parents to basically “set it and forget it” by starting out investing aggressively when a child is young and shifting towards more conservative investments like fixed income as they get closer to college age.

The Plan also refined its individual fund and static portfolio options for families who want to customize their investment strategies. These enhancements added four new static portfolios, including three low cost passive portfolios, income, blended and growth, all managed by Vanguard.

Same great tax benefits to help grow your savings

Your Florida 529 Savings Plan investment grows tax-deferred and distributions are completely tax-free when the funds are used to pay for qualified education expenses, including:

  • College tuition, fees, books and supplies
  • Room and board costs if the student is enrolled in college on at least a half time basis
  • Computers, software and internet access for college students
  • Up to $10,000 per year in K-12 tuition expenses

With reduced fees and earnings that grow tax-free – the only thing left to do is visit the website to open an account and put your child on the path to reaching their dreams.