Some advisor-sold 529 college savings plans have up-front sales charges. For example, Class A shares may involve a sales charge of as much as 5.75%, but also involve lower annual expenses.
A breakpoint reduces the sales charge on new investments when the total investments exceed a specified threshold.
This table shows the ladder of one such breakpoint scheme.
Less than $50,000
|$50,000 to $99,999||4.75%|
|$100,000 to $249,999||3.75%|
|$250,000 to $499,999||2.50%|
|$500,000 to $999,999||2.0%|
|$1 million or more||0.0%|
Some 529 plans provide investors with rights of accumulation, which let investors qualify for a breakpoint by combining all assets held by the investor and the investor’s immediate family, including investments in mutual funds and trusts outside the 529 plan that are managed by the same 529 plan manager.
Rules for breakpoints and rights of accumulation vary by plan.
To get these discounts, it is best to tell your financial advisor about your family’s holdings with the plan manager. The discounts aren’t necessarily automatic.