Although many tax breaks created in the past decade may expire, 529 college savings plans have permanent tax benefits. Investments won’t be taxed, inside the plan, and withdrawals are tax-free if the money is used for higher education.
However, 529 plans vary from one state to another. Some charge higher fees than others. Usually, you will pay less for a plan that you buy directly from the sponsoring state. The typical cost for a directly-sold fund in a 529 plan is about 0.25% a year; if you invest in a 529 plan through a broker or a financial planner the annual fund fee might be 1% or more.
Many 529 plans now offer bank accounts with federal deposit insurance. If you want that kind of safety in your college fund, you might as well invest in a tax-free 529 plan that includes this choice.