Even when the obvious fees seem relatively inexpensive, there are many stealth fees that you may be charged. And while most plans don't have all of these charges, many of them have some of them. So it pays to learn what your plan charges and whether it's possible to avoid some fees.
If you're just starting to save for college, remember that you can invest in a plan in any state and have lots of options.
"As regulation increases and market returns remain fairly low, financial institutions are relying more than ever upon the creative levying of fees for their profits," says Rob Drury, executive director of the Association of Christian Financial Advisors in San Antonio. "Anyone is free to choose any state's plan, so you can compare all aspects of every plan to others, including nebulous fees."
There also are expenses so obscure that it's almost impossible to find specific information about them, such as how much the funds in your 529 plan pay for buying and selling the portfolio's stocks and bonds, says Brian Edwards, a financial adviser with The Edwards Group, a financial planning firm in Columbus, Ohio.
"Mutual funds have trading costs that investors pay, that aren't even disclosed," he says. "Managers buy and sell bonds and stocks and pay transaction costs, and those can add up."
Most fees are disclosed. Here is a rundown of obscure 529 plan fees you might encounter. Specific plan fees were accurate as of mid-March 2011.
Wire transfer fees: If you choose to fund your 529 account with a wire transfer, a type of electronic funds transfer, some plans charge fees. Colorado's CollegeInvest Direct Portfolio 529 plan charges a $25 wire transfer fee.
Administrative Fees: Some plans charge out-of-state residents a yearly administrative fee, which they waive for in-state residents. For example, Alabama has a $12 administrative fee. Other plans charge an account maintenance fee for investors with balances below a certain amount. Alaska's 529 plan charges a $20 fee for accounts with balances less than $20,000, but waives the fee for investors who sign up for payroll deduction or automatic deposits. Wisconsin's EdVest 529 plan charges a $20 account maintenance fee for out-of-state residents or those who don't participate in an automatic deposit plan or have a balance greater than $25,000. The New York 529 College Savings Program-Advisor Plan levies a $25 annual fee for accounts with balances of $25,000 or less.
Paper statement fees: It costs 529 plans and mutual fund companies more to prepare and mail out a paper statement than it does to deliver it online. So more plans and mutual fund companies are charging paper statement fees to encourage them to get statements online.
Reissue of disbursement check: Should you request a disbursement or payout of your saved 529 contributions and misplace or lose that check, many plans will charge a fee to reissue it. The fee for Colorado's direct 529 plan is $5.