Before opening your North Dakota 549 plan, learn what fees you will have to pay so you can make an informed financial decision.
One of the greatest benefits of 529 plans is the huge variety from which families can choose, no matter where they live. Each state offers its own program (or programs), complete with unique investment options, tax incentives, and other advantages that make 529 plans powerful tools to help you save for college. However, 529 plans also vary in terms of cost; depending on where you get the plan and what kinds of investments you pick, you could owe only a small fraction of a percent in fees, or you could be charged several percentage points, making it crucial for any prospective account owner to eye the fees attached to a given plan before signing up. Here, we’ll look at what fees are associated with a 529 plan in North Dakota; keep reading to learn more.
As mentioned above, every state has its own version or versions of the 529 plan, each of which belongs to one of three categories: the education savings plan, which functions like other types of investment accounts; the prepaid tuition plan, which involves buying education “units” that can be redeemed for credits or semesters; and the ABLE account, which helps Americans with disabilities cover education expenses and other costs related to their condition.
In North Dakota, only the first of these options is available, albeit in two different forms. North Dakota offers a program called College SAVE, which provides educations savings plans to families as either a direct-sold or advisor-sold plan.
At a glance, the two types of 529 plans available from North Dakota are very similar; they have the same number of investment options, for instance, and both invest in Vanguard mutual funds. The variation between the two largely comes down to the fact that one is advisor-sold and the other is direct-sold – a fact that generally brings a difference in fees.
Like other kinds of direct-sold plans, North Dakota’s College SAVE (Direct) program allows account owners to sign up for an account themselves by going online to the plan’s website or using a tool like the free Sootchy mobile app. This process will require providing some basic personal information, after which you’ll choose your investment options and start making contributions.
Aside from the streamlined signup process, what makes a North Dakota direct-sold 529 plan distinct from an advisor-sold option is the lower fees. Because a direct-sold plan comes with fewer bells and whistles – everything is handled by the account owner, more or less, rather than by a financial advisor – they don’t cost as much, allowing the person with the account to keep more of their earnings and possibly make more money in the long run.
An advisor-sold plan, however, involves the help of a financial professional, and that added benefit means greater expenses for account owners with one of these plans. Any advisor-sold plan will carry higher fees than its direct-sold counterpart, though not all states offer both direct-sold and advisor-sold versions of their plans.
Although North Dakota’s College SAVE (Advisor) plans do have higher fees than the state’s direct-sold option, the differences are not all that significant. Below, we’ll look at the types of fees that come with each of North Dakota’s 529 plans and how they vary from one plan to another.
Most 529 plans around the country come with some sort of account maintenance fee, which is typically a flat amount paid annually. Account owners with a North Dakota plan can have their account maintenance fees waived if they (or the beneficiary of the plan) are a North Dakota resident, if the plan is signed up for certain match programs, or if the plan was started before early 2002 and the owner or beneficiary was a South Dakota resident. Otherwise, your plan will cost $20 per year in account maintenance fees.
This is where the advisor-sold 529 plans in North Dakota get a bit more expensive. For someone with a direct-sold plan, the program maintenance fee is between 0.44% and 0.45% of the account balance, whereas advisor-sold plans can charge as much as 0.80%. However, account owners with an Interest Accumulation Portfolio only owe up to 0.50%.
The last type of fee that applies to a 529 plan in North Dakota is the investment fee, which covers the cost of the fund in which the account owner is invested. Both advisor-sold and direct-sold plans charge between 0.04% and 0.05%, depending on what investments are in the portfolio. Keep in mind that this fee applies to each investment, so having multiple portfolios will lead to higher costs overall.
In all, the fees for a North Dakota 529 plan are fairly low. The highest amount you could be charged for a single-portfolio advisor-sold plan is 0.85% (or 0.55% for those with the Interest Accumulation Portfolio), while the maximum charge for a direct-sold plan is 0.50%.
Though there are a number of important factors to consider when choosing the right 529 plan, the process of opening an account isn’t all that difficult. Just download the free Sootchy mobile app and you can easily enroll in a plan, invite contributions from loved ones, and manage your investments, all at the push of a button. Learn more by visiting Sootchy online or downloading our app today.