Are Utah 529 fees worth it for target date funds?

Seeking Advice
1

Based on this fee chart, Utah’s 529 fees range from 0.100% for the Total US Stock Market to 0.200%. I’m considering a target date fund with a 0.114% fee. This feels high compared to equivalent funds in a 401k or IRA, which usually have much lower fees.

What’s the best option for someone wanting semi-passive growth? I don’t mind adjusting the allocation later, but is it worth paying these fees for the convenience of a “set and forget” approach with a target date fund until my kid starts using the funds?

2

If you’re not a Utah resident, you might want to consider other 529 plans. However, if you do live in Utah, the state tax deduction might make it worth sticking with the Utah plan.

Here’s a resource for comparison: Saving For College - Utah 529.

As for the fee, 0.114% is still relatively low, especially since it includes administrative costs.

3

@Isaac
Great point. Also, if you’re in a state like Missouri, you can use any state’s 529 and still qualify for your state’s tax incentive.

4

@Isaac
The difference between a 0.02% fee (common for low-cost index funds) and 0.114% is about 94 cents per $1,000 per year. In the context of a 529 plan, that’s negligible, especially considering the administrative benefits.

5

I personally use California’s ScholarShare 529. Their target date index funds have fees in the range of 0.04-0.08%.

6

Rafael said:
I personally use California’s ScholarShare 529. Their target date index funds have fees in the range of 0.04-0.08%.

We were advised to go with ScholarShare by our financial planner, and it’s been a good choice.