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Virginia 529 Review – A Simplified Independent Analysis

This Virginia 529 review takes a simplified look at hard-to-understand program. Use this page to help determine which plan and investment choices work best for your family.This Virginia 529 review sorts through the VA state college savings plans to help you make the best decisions for your children. It also explains the various investments and links to independent sources for investment performance and holdings.

Please also read my related blog posts The Best 529 Plan for My Daughter is Not as Perfect as She Is, and How Our Family Is Saving For College.

Note: If you see any inaccuracies or link updates that need to be made, please let me know by contacting me or stating in the comments below. Certain links to the website have been known to change, but the programs themselves have remained mostly the same for the past few years. 

After my first child was born, I tirelessly evaluated a range of options for a tax-advantaged college savings program. I looked at various state’s plans and dug deep into the Virginia 529 plans. Since residents of Virginia can deduct contributions they make to the Virginia 529 plan (and cannot deduct contributions if participating in other state plans), VA 529 is the best option for residents.

Despite being the best option, and being ranked as a top plan nationally, it still has plenty of flaws.

For starters, the literature on the website is unnecessarily wordy, especially for the Invest529 program. As money nerd doing my own research, I knew others must struggle to interpret all the plan variations. At the same time, I started the Retire Before Dad finance blog which gave me a platform to share my findings.

I’m a parent and plan participant. Read more about me here.

I hope you find this information helpful. This page has become the leading independent resource for understanding the Virginia 529 plan.  It’s also a place to advocate for improvements to the plan. Parents want:

  • Affordable in-state college opportunities
  • Excellent tax benefits for investing in the Virginia 529
  • Diverse, low-cost investment options
  • Impeccable plan transparency
  • An overhaul of the website user interface for Invest529 participants (needs major improvements), or simply abandon the in-house administration and outsource it to a reputable low-cost third party such as Vanguard.
  • Modern account features (i.e. one account that holds all funds, not a separate accounts for each)
  • Simplicity (needs improvement)
  • Ease of payment to in-state or out-of-state colleges

Below I list the four Virginia 529 plans and give a quick summary.  Then I’ll elaborate on each one. When plan updates are announced, I do my best to update the sections.

Virginia 529 Review Basics

According to the Virginia 529 website, it is the nation’s largest 529 program with more than $54 billion in assets. Virginia residents who participate in the plan can contribute up to $4,000 dollars per each prepaid tuition account or savings trust account, which is tax deductible from their Virginia state return, but not a federal tax return.

So if you contribute $4,000, and live in Virginia, you pay taxes on $4,000 less than you would have if you did not contribute.

For example, if you have more than $17,000 of taxable income (if you are reading this you, you probably do), and you contribute $4,000 to a Virginia 529 program account, you do not pay taxes on that $4,000.

The savings is 5.75% (the state income tax rate) of $4,000, or $230 on your Virginia tax return. That’s a 5.75% return on the $4,000 investment.

That $4,000 is contributed to one of the four Virginia 529 programs.  The money grows tax-free, meaning you do not pay taxes on any gains.

Tax Deductibility Resource

The tax deductibility of the Virginia 529 law is very confusing and information on the internet varies. I found this link to a Bogelheads forum which helps explain it and adds the actual text from the law and a ruling on the law.

From what I’ve read, you can take a $4,000 tax deduction for each account per owner, per beneficiary. So if you have two children, and you and your wife each open one account for each child, that’s four accounts. You can contribute $4,000 to each account equaling $16,000, and take that amount in deductions per year.

Furthermore, when you invest in a Virginia 529 Invest529 fund, each purchased fund is opened in a separate “savings trust account”. $4,000 for each of those accounts can then be deductible for each child per account owner. Any amount over $4,000 in an account can be carried over the to next year. Based on the forum linked above, it appears you can deduct an almost unlimited amount if you open separate accounts by each owner for each child, and use the Virginia 529 Invest529 selection of funds.

From what it seems, the law was written with the intent to limit deductions to $4,000 to each child. However, the way they built the information technology was to create a separate “account” for each fund invested in. Either this was a mistake, or the loophole was put in place to favor those who can invest amounts much higher than $4,000 per year.

Of course, don’t rely on tax advice from an internet forum or my blog. Consult the written law directly yourself or contact a Virginia based tax adviser.

The Virginia 529 Plans

Prepaid529 (formerly Virginia 529 Prepaid) – A plan to prepay college tuition today that can be used when your child is college ready.

Invest529 (formerly Virginia 529 inVest) – The Invest529 program is a top-ranked national program but still has limited and convoluted investment options.  This is the plan I use for my three children, reluctantly, due to the lack of diverse investment options and HORRIBLE website user interface.

This program is quite confusing. I try to simplify it as much as I can below. While it is confusing, some of the investment choices are excellent. You just need to understand the difference between age-based, passively managed, and actively managed. The terminology used by the program, such as “Aggressive Growth”, leaves out an important detail… The name of the fund. I try to clarify this.

CollegeAmerica – This is another top-ranked plan. It’s in partnership with American Funds, a notoriously high-fee managed mutual fund company. You must open an account through a financial adviser to enroll (and you’ll pay adviser fees too).

CollegeWealth – This is a basic high-yield FDIC insured savings account with a bank. As of January 1st, 2017, an FDIC-insured portfolio option is added to the Invest529 program, rendering the CollegeWealth program unnecessary, in my opinion.

Let’s go over each with a bit more detail.

Virginia Prepaid529

This program allows parents to prepay college tuition and fees at a given price today. When the child is college-aged, the program pays out money for the child’s education. The child may go to a public or private Virginia college, and money can also be paid to out-of-state schools. However, the amount paid out varies between Virginia public, private, and out-of-state.

TRANSLATION: the best deal is going to an in-state public college.

There is a limited enrollment period during the year and the account owner must be a resident of Virginia at the time of the account opening. For more detail on this plan and the others, I suggest going directly to the Program Description PDF on their website. Click here to find a link to the Program Description for the Virginia Prepaid529.

The plan is meant to allow a parent to save money by prepaying tuition at today’s college rates, and the student’s college would be paid for at the time they are ready to attend at age 18.

I did not choose this option because first and foremost, the right college for my children may not be in the state of Virginia. The ability to transfer the amount paid to another state 18 years from my son’s birth is likely uncertain. According to page 10 of the Program Description, “Some Out-of-State Institutions will not accept payments directly from a third party such as prePAID” requiring the account owner to transfer the money to another account.

This is a headache indicator.

Additionally, the way this program is calculated today could change and you never know how long it will last. There is also a limited enrollment period. If your child is destined to go to some in-state public college or university, maybe this program is for you. But the uncertainty and questionable choices for out-of-state colleges make this a plan I’ve stayed away from.

Virginia Invest529

The Virginia Invest529 program is administered by the people at Virginia 529. If you choose this option, you create an account on the website and choose your investment strategy. My three kid’s Virginia 529 accounts are in the Virginia Invest529 program.

I chose this plan because it seemed like the most diverse and low-cost option. The plan offers an OK number of options for investments. The types of investments are broken into three types; Age-based Portfolios, Passively-Managed Static Portfolios, and Actively-Managed Static Portfolios.

These were previously known as “evolving” and “non-evolving”, confusing things. Those references are gone now. But the wordiness remains.

You can find a link to the Invest529 Program Description here.

Age-Based Portfolios

As of January 1st, 2017, the age-based portfolios have changed names. The table below lists the new names (which represent the year your kids will start college), the old names (confusing and meaningless), recommended age, and the 2017 asset allocation profiles.

New Name Old Name For Ages Allocation as of Jan 2017
 2036 Portfolio  None  0  80% Equity/20% Fixed Income
 2033 Portfolio  Rappahannock  0–3  73.3% Equity/26.7% Fixed Income
 2030 Portfolio  James River  4–6  63.4% Equity/36.6% Fixed Income
 2027 Portfolio  Eastern Shore  7–9  53.4% Equity/46.6% Fixed Income
 2024 Portfolio  Alleghany  10–12  43.3% Equity/56.7% Fixed Income
 2021 Portfolio  Chesapeake  13–15  30% Equity/70% Fixed Income
 2018 Portfolio  Potomac  16–18  8.3% Equity/91.7% Fixed Income
 2015 Portfolio  Southside Closed to new investors  100% Stable Value
Stable Value Piedmont  18+  100% Stable Value

The age-based portfolios are meant to be “buy it and forget it”. In other words, if you contribute to one of them, the fund will change over time so you will not need to make adjustments. So if you start buying into a fund when your child is a newborn, the asset allocation of the fund will be more aggressively geared toward stocks. 80% to stocks, and 20% to bonds.

As the portfolio ages, along with your child, the asset allocation changes to a greater percentage of fixed income, and less stocks, until the child is college age, at which point the fund would be 100% invested in safer, fixed investments.

All of the age-based portfolios are made up of just eleven underlying investments (and they haven’t changed at least since 2012). You can find the list of underlying investments in the Program Description by searching for “Underlying Investments of the age-based Portfolios”.  According to the program description, there is a description of the “Investment Managers”, the people who select the underlying investments. It is a little vague, so interpret as you will:

“VA529’s Board is responsible for long-term Asset Allocation guidelines, Asset Allocation strategy, and the investment manager selection policy. Upon the Board’s direction or at the direction of VA529’s Chief Executive Officer, the Board’s Investment Advisory Committee is responsible for, among other things, Virginia529 Invest529 — Program Description interviewing, selecting and/or terminating investment managers, including Mutual Funds, that professionally manage the moneys within Invest529. In carrying out these duties, the Board and the Investment Advisory Committee consult with the Board’s investment consultant.”

The investment consultant is listed later in the document as Mercer Investment Consulting, Inc.

I could find no clear listing of the members of the Investment Advisory Committee, but it seems to be staffed by members of the Board of Directors. This should be stated more clearly on the website but is not, or I can’t find it. If the Virginia 529 people happen to be reading this, please point me to the correct location of this link, or add it to your website and I will add it here.

Below is a list of the Underlying Investments for all of the nine age-based portfolios. Of all of the thousands of mutual funds, index funds, and ETFs in the country, they chose only 11 Underlying Investments.

I should add, as of 12/28/16, these haven’t changed at all since I opened the account for my first child in February 2012. The funds with a symbol are actual mutual fund investments. Click the link to see an independent summary of the investment on Yahoo Finance. The funds listed as N/A are not publicly available. As listed they are specific investment accounts for the VA Invest529.

It would be nice to have more information on these funds for transparency sake, but I cannot find it.

Investment Manager Asset Class Fund or Separate Account Symbol
Aberdeen Asset Management Emerging Markets Equity Aberdeen Emerging Market Fund ABEMX
Capital Research and Mgt Co. International Equity American Funds EuroPacific Growth Fund RERGX
DFA Investment Dimensions Group Inc Emerging Markets Equity DFA Emerging Markets Core Equity Portfolio DFCEX **
Invesco Advisers, Inc. Stable Value Separate investment account for Invest529 N/A*
Morgan Stanley Global Real Estate Morgan Stanley Institutional Global Real Estate Fund MRLAX
Prudential Investment Mgt, Inc. High Yield Bonds Separate investment account for Invest529 N/A*
Rothschild Asset Management Inc. Small-/Mid-Cap Domestic Equity Separate investment account for Invest529 N/A*
StoneHarbor Investment Partners Emerging Markets Debt StoneHarbor Emerging Market Debt Fund SHMDX
Templeton Institutional Funds, Inc. International Equity Templeton Foreign Equity Series TFEQX
The Vanguard Group, Inc. Market Fixed Income Total Bond Market Index Fund VBMPX
The Vanguard Group, Inc. Small-Cap Domestic Equity Small-Cap Index Fund VSCIX
The Vanguard Group, Inc. Large-Cap Domestic Equity Institutional Index Fund VINIX

* The Virginia 529 provides no details on these investments. The lack of transparency of these investments may be unacceptable to some investors. Invest at your own risk.

** New as of March 28th, 2016. Virginia529 will reallocate approximately half of the funds currently invested in the Aberdeen Emerging Market Equity Fund to the DFA Emerging Markets Core Equity Portfolio. New monies invested in the impacted Invest529 portfolios will be allocated to the DFA Emerging Markets Core Equity Portfolio beginning April 1, 2016.

If you invest in one of the age-based portfolios, a separate account is opened for the beneficiary (for your kid, with you as the owner). It’s implied by the Virginia 529 that the age-based portfolio investment options the only fund to need to buy to keep things simple and risk-appropriate. They will administer the investments, and you can sit tight for the next 18 years and your money is safe. You chose the portfolio based on your child’s age.

These are all fairly conservative investments, as they should be. But you need to decide if they are allocated to fit your risk tolerance. I originally decided to put half of my son’s savings into an age-based portfolio for my son. However, later I moved it out because 20% in bonds was too conservative for me. I’ve since put most of the other contributions towards the total market stock fund, and will continue to do so until he is 10 or 12-years-old.

Passively-Managed Static Portfolios (Formerly Non-Evolving Portfolios)

Update 12/28/2016: The FDIC-Insured Fund was added to Passively-Managed Static Portfolio options. This fund is a money market fund. This does the same thing as the CollegeWealth, interest on cash. 

“Passively-Managed Static Portfolios” is a fancy name for index mutual funds. They have been chosen by the Board of Directors/Investment Advisory Board with the help of Mercer Investment Consulting. Participants of the Virginia 529 Invest529 program are given eight index funds to choose from. I have added Yahoo Finance links to each investment so you can get an independent look at the underlying holdings, performances, and profiles.

These are the best investment choices for most people. They are low-fee Vanguard funds. Investors have been flocking to Vanguard over the past decades.

These low-fee index funds are what make the Virginia 529 plan a top plan on a national level.

I almost exclusively invest in these funds now and would recommend them to a family member (like my kids).

Index fund investing will match market performance. Most actively managed funds do not over long investment periods. 

Here is a link to a recent study by Vanguard called The Case for Index Fund Investing. If you look at the data, about 80% of actively managed funds do not beat their target index. There’s plenty of information on the internet regarding indexing vs. active management. That’s essentially the decision your making when investing in the Virginia Invest529 program.

The index fund choices are:

Invest529 Portfolio Name Index Fund Name Symbol
Aggressive Vanguard LifeStrategy Growth Fund VASGX
Moderate Vanguard LifeStrategy Moderate Growth Fund VSMGX
Conservative Vanguard LifeStrategy Income Fund VASIX
Total Stock Market Index Vanguard Total Stock Market Index Fund VITSX
Total Bond Market Index Vanguard Total Bond Market Index Fund VBMPX
Total International Stock Index Vanguard Total International Stock Index Fund VTSNX
Inflation-Protected Securities Vanguard Inflation-Protected Securities Fund VIPIX
REIT Index Vanguard REIT Index Fund VGSNX
FDIC-Insured Money Market Fund N/A

Update 12/09/2015: I’ve changed my son’s contributions to three funds. VITSS, VTSNX, and VGSNX. I’ve decided to be more aggressive until he reached age 10-12. He is almost five. The age-based James River was not aggressive enough for my taste. However, I still am holding the amount I originally put into it.

Actively-Managed Static Portfolios

Another unnecessarily fancy name. Actively managed usually means a regular mutual fund. That is what the Socially Targeted Parnassus Equity Income Fund is. That fund has been around for a while now and has performed well against the market.

The other three actively-managed static options are new as of October 2015 (but they are not mutual funds). Here is the clear as mud press release.

Of all the additions they could have made to the plan, these are nearly pointless** in my opinion. What they’ve done is taken three of the age-based portfolios, and decided they won’t “evolve” them over time.

The underlying investments are exactly the same as the age-based portfolios listed earlier.

Invest529 Portfolio Name Fund/Current Age-Based  Symbol
Socially Targeted Parnassus Equity Income Fund PRILX
Active Aggressive *** 80/20 equity to fixed income ratio N/A
Active Moderate *** 50/50 equity to fixed income ratio N/A
Active Conservative *** 25/75 equity to fixed income ratio N/A

***New as of October 2015. These portfolios mimic the investment allocations of the corresponding age-based portfolios. However, they do not adjust (i.e. evolve) over time.

Major Downsides of the Invest529 Program

Two glaring problems emerged once I opened my son’s account with the Virginia Invest529 program.

1. The website user interface used to log in, view, and update your account is TERRIBLE.

The Virginia 529 has invested a lot of money into the main website and it is unique, fairly easy to navigate, and informational. It uses modern technology and design and is generally a pleasant website. But it’s a bait and switch.

Once you open an account and log in, the interface is archaic, ugly, difficult to navigate, poorly organized, a hugely disappointing. As in, why did I open an account with Virginia Invest529? disappointing.

For the most part, you can figure out everything you need to do here, but nothing is easy. The other difficult aspect of the website is related to glaring problem #2…

2. For every fund or ‘portfolio’ you select to invest in, a separate account is created. So when you have money withdrawn from your bank account to deposit, a separate withdrawal is made from your bank account.

To help explain, take an IRA plan with any large company like Fidelity or Vanguard as an example. Let’s say you want to invest $400 per month into your account. A withdrawal of $400 is automatically made from your bank account by Fidelity, then Fidelity takes that $400 and puts $100 into four different mutual funds of your choosing. When you get a monthly or quarterly statement, all four fund are summarized on one statement. Simple, right?

Well with the Virginia 529 plan, if you used the same amount of money on a monthly basis, VA 529 would make four separate debits from your bank account of $100 each on the same day, and purchase shares in four separate accounts. Each fund has a separate account number.

Recent improvements have been made to the Invest529 statements. You no longer get a separate page for each account every month. Now statements consolidated by plan and participant. So my daughter’s three different fund holdings show up on one statement, even though each fund is a separate account.

This goes back to the tax deductibility confusion.

Despite recent statement enhancements, there is an obvious flaw in the way their data is set up and the relationships they have with their fund providers. This terrible system discourages diversifying your portfolio, makes inter-fund transfer difficult, and pushes the participant to choose one age-based portfolio for simplicity.

Had they used a professional company such as Fidelity or Vanguard to administer their plan, this issue would not be present. Instead, they chose to build their own customer portal (which sucks), surely at a great cost, and they are forever in the information technology (IT) business now along with the college savings business.

This was obviously a poor decision that the Board of Directors or the Virginia legislature made a long time ago that probably cannot be corrected. What’s needed is a significant investment in their IT architecture, including back-end processing and a better user interface for their participants, instead of a prettier public facing website.

These two problems made me seriously consider other options for my children’s college savings. But the tax benefits outweigh the annoyances.


The CollegeWeath program is simply a bank account with either BB&T or Union First Market Bank (click the bank name for the program description).

These bank savings accounts are for very conservative savers and only really make sense for a child who is within five years of attending college. But the age-based portfolios are also designed for kids approaching college, so again, choose based on your risk tolerance.

The CollegeWealth program has the same tax savings for up to $4,000 per year (increasing your VA tax refund by $230) as the other plans, and the bank accounts pay a modest interest rate. This money grows tax-free in the account.

Positives I see from this plan is that both banks let you sign up online, linked from the Virginia 529 website. Also, the relatively high bank rates and FDIC insurance that comes with a bank account are positives. While it has some basic highlights, I would not consider this option for my children because it is too conservative over 18 years. When my son is 14 maybe I’ll look into it again, but there are conservative options in the Invest529 plan that would be comparable to a savings account.

The whole concept of this plan could have been incorporated into the Invest529 or CollegeAmerica plans very easily, and essentially already is. So this program is unnecessary in my opinion and was likely a gift to the banks by someone in the VA legislature or Board of Directors when the program was initiated…

Note: As of 01/01/2017, the FDIC-Insured Portfolio is now available as a “Passively-Managed Static Portfolio”. It’s an “omnibus bank savings account with Union Bank & Trust”. In other words, it’s a money market fund. Availability of the FDIC-Insured Portfolio could be the first step in eliminating the CollegeWealth plan altogether (in my opinion), as it renders the CollegeWealth plan redundant and not necessary (which I’ve been saying for three years now). 


Last but not least is the CollegeAmerica plan administered by American Funds. In some independent reviews, CollegeAmerica has ranked as the best of the four VA plans and ranks high nationally. I did not give much consideration to this plan for my family for two reasons.

First, my particular crappy 401k plan only invests in American Funds, so a large portion of my net worth is in their hands already. For the sake of diversification cost control, I chose to avoid the use of American Funds.

Second, the plan REQUIRES you to open an account with a financial adviser instead of just signing up online. This to me is a deal-breaker because I prefer to manage my finances myself, and like to have access online to make decisions.

Reading more into this plan, I learned that once you sign up you do have online access, but finding a broker is another step you would have to take to use this plan. That means screening numerous brokers to find one you like and can trust and is not about to retire.  Or, the website does say you can simply call a number and they will set you up with an adviser if that is your cup of tea. But you will likely be stuck with whoever answers the phone that day and not necessarily the best person for you.

If you already have an adviser who is qualified to open a Virginia 529 account for you, this may be a good option. When you bring in an adviser, you are guaranteed to introduce greater fees on your account. On the plus side, the CollegeAmerica plan would open up a much larger pool of investment options, although they are all American Funds which have notoriously high costs.

Again, introducing an adviser usually increases fees. The expense ratios for those funds are available in the prospectus on that link above. In addition to the fees, all advisers want to grow their relationship with you and your money over time. So you can expect calls from your adviser offering more advice, and to ask you to give them your non-education money to be placed into more American Funds.

I happen to know a Virginia financial adviser qualified to open a CollegeAmerica account. He said it’s sort of a hassle because most people inquiring have small asset bases. Meaning, they aren’t wealthy. If you aren’t wealthy and you contact an adviser, they often aren’t willing to spend a lot of time with you. If you are wealthy, they’ll want to sell you more services. Lose-lose, in my view. But I’m biased.

If you do choose an adviser, make sure they are a “Fiduciary”. Ask them point blank Are you a fiduciary? If they are, they are required by law to put your best interests first. Most advisers are not fiduciaries and therefore put their own best interests first. Read more about fiduciaries here or google it.

Comparing the Other States Plans to Virginia

Look, there are some great websites out there for comparing the plans of different states.  I especially recommend as an objective source for all things 529. But they focus on all of the plans, not just Virginia 529.

There are also plenty of rankings.

But if you are a Virginia resident, you need to keep this simple fact at the forefront of your mind: Virginia residents who pay taxes in Virginia and participate in one of the Virginia 529 plans, are the only people who can get a Virginia state tax deduction from investing in their 529 plan.

Meaning, if you live in Virginia, and open an account with another 529 plan not associated with the state of Virginia, you will not get to deduct the $4,000 from your VA tax return.

I did look at the programs with Fidelity (NH, DE, AZ, Mass), TD Ameritrade (NE), and Vanguard (NV, IA, CO, NY, MO) in my search.  But ultimately for my daughter’s new plan, I chose to go with the Virginia 529 Invest529 plan again because of the low fees and few acceptable investment options.

Virginia 529 Review Summary and Rating

Keep in mind, these ratings are my opinion and comparable other similar financial products such as online brokerage account and retirement savings plans. Not compared to the other state 529 plans.

Ease of Use

If participating in the Virginia 529 was easy, this web page would not be necessary. The plans are very difficult to understand.

The Virginia Invest529 plan was poorly designed from the beginning, both from a data structure perspective and for the user. The program is in need of significant investment to modernize the platform and program. The user interface is terrible. Keep your expectations very low.

Every aspect of using the platform is confusing, arduous, and counter-intuitive.


Most of the information you need to understand the Virginia 529 plan is available on their website. However, it’s extremely complicated and difficult to decipher. The VA 529 Board should consider simplifying the plan to help with transparency.

Three out of 11 underlying investment funds that make up the Age-Based Portfolios are not available for independent research from a third-party website. The funds include:

  • Invesco Advisers – Stable Value
  • Prudential Investment. – High Yield Bonds
  • Rothschild Asset Management – Small-/Mid-Cap Domestic Equity

The advisory board should make more independent research data available for these funds or choose alternatives to improve transparency.

Investment Selection

The funds available in the Passively-Managed Static Portfolios are excellent. Vanguard is known for its low-fee index funds. These funds are suitable for most VA 529 investors.

The CollegeAmerica provides access to additional funds, however, the quality is lower due to high fees. A broader selection of funds in the Virginia Invest529 plan and access for advisers to the platform would be enough to eliminate CollegeAmerica.

Having spoken to Virginia-based advisers qualified to help VA residents with CollegeAmerica, there is little incentive for them due to the small size of most accounts. Having this option complicates the plan, increases fees, and serves as a lead magnet for advisers.


The funds available in the Passively-Managed Static Portfolios have low fees and are good. But the CollegeAmerica fees are very high due to the notoriously high-cost of American Funds with little evidence of index outperformance. Savers suffer additional fees from the requirement of working with a paid adviser.

Also, some of the funds in the Age-Based Portfolio underlying funds carry higher fees than necessary.

The VA 529 Board can lower the fees even further by choosing a lower-cost partner such as Vanguard instead of American Funds.

Tax Advantages

VA residents can save up to $4,000 per child per accounts, lowering their State income taxes. Thanks to the poor design of the Virginia Invest529 investing platform, you can have numerous “accounts” per child because each holding is considered an account. Therefore, you can save more than $4,000 per child. Speak to your CPA to confirm this before implementing.

Non-Virginia residents do not receive tax benefits.

Virginia 529 Review
  • 5/10
    Ease of Use - 5/10
  • 7/10
    Transparency - 7/10
  • 8.5/10
    Investment Selection - 8.5/10
  • 7.5/10
    Fees - 7.5/10
  • 9.5/10
    Tax Advantages - 9.5/10


Overall, the Virginia 529 is a top plan nationwide, but still suffers from significant shortcomings. Virginia residents saving for college should utilize VA 529 for the tax advantages, but keep your expectations low.

** I am not a tax or investment professional. Contact your tax adviser for your specific tax implications. Also please view the Disclaimer page. The opinions expressed on this website are my own and should not be considered advice. Consult your own investment adviser to determine the best investment vehicles for your needs and risk tolerance.

Note: If you are a representative or affiliate of the Virginia 529 Board and would like to correct or challenge anything on this review page, please contact me. I’m also available to engage in dialog regarding possible plan improvements. Congratulations on your rankings, but the plan still needs improvement. Note to readers, the Virginia 529 Board has not contacted me to dispute anything on this page. 

Thank you for reading and commenting on my Virginia 529 review.

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25 Responses to Virginia 529 Review – A Simplified Independent Analysis

  1. Viral February 5, 2014 at 10:14 pm #

    Nice, balanced analysis reflecting your perspective. For the VA prepaid, the 2014 enrollment prices for a young kid is approximately $61,400 for 8 semesters in one lumpsum payment. With a downpayment of $10,000 and 5-year monthly payment, it ends up being about $71,000. The 8% finance charge still becomes yours. Currently, a 4-year public university college costs $30,000 (minimum) to $44,000 (maximum). So even if you consider the average of about $36,000 in 2013 prices for a 4-year degree, you are paying about 50% more (the $71,000 5-year payment scenario). This is an excellent deal. In 18 years, a 4-year degree may easily cost in excess of $120,000 at a public university, given historical trends. By contrast, if one invests in a 529 investment plan, let us consider the same $71,000 contribution over say, a 12 to 14 year period. Will that double in value in the stock market? Perhaps, yes, but one can never be certain. Skyrocketing tuition rates is certain but gyrating stock markets and volatility is also certain. I am willing to hedge my bets with the prepaid plan. Of course, downside is restriction to VA state…..but this is college and not graduate school.

    • retirebeforedad February 6, 2014 at 7:02 am #

      Thanks for your insightful and thoughtful comments. Of the people I’ve heard from and spoken to, you are the first to indicate the choice of the prepaid option. The way you put it, yes, that is an excellent deal. When I analyzed the programs for my kids, I wanted to leave open out of state options for undergrad. However, when I chose my college, I did not strongly enough consider the in state options and ultimately went out of state for a higher price. I intend to stress more fervently than my Dad did, for my kids to stay in state for school, explaining the cost factor better early on. That said, I prefer investing the money myself over the 18 years and lowering my risk as they get closer to school. Virginia has many good institutions so prepaid gives kids great education opportunities.

  2. Viral February 6, 2014 at 2:55 pm #

    Hi RBD, Indeed, one has to explain to one’s kid early on about lower cost tuition in-state than out of state. Those will be difficult, emotional conversations, especially if the child ends up being super-bright and wants to study in an Ivy League school. I am seriously considering the VA pre-paid only because as you pointed out, VA has many good institutions – than just 1 or 2 good institutions.

    I forgot to add another perspective yesterday. Even if the $71,000 contribution to a mutual fund instrument doubles to say $140,000 in value, a large proportion will potentially be used to pay for significantly higher tuition rates in 18 years. Will a 4-year college degree in year 2030 cost in excess of $100,000?

    Still this is a minority viewpoint. As I can recall from published data elsewhere, only about 3,000 people enrolled in VA pre-paid in 2013 enrollment period.

    • retirebeforedad February 6, 2014 at 3:28 pm #


      Thanks again for stopping by. I hope this information helps you to make your decision of which plan to choose. I just added more links to a related post I wrote. Here is the URL if you missed it: It goes through my thinking process when I made my decision. I’ve since changed my sons plan to just three funds.

      3000 is not a lot of people. I’m guessing the program has grown since 18 years ago. I think college will cost significantly more than $100,000 18 years from now. Closer to $200,000 or more.

      Good luck to you.

  3. Andy April 10, 2015 at 7:48 pm #

    Great article. I was looking for that exact question you covered – can I get a VA tax deduction for non-VA 529 plans (like the vanguard one). You clearly explained this! Thanks,

  4. PD October 9, 2015 at 11:17 am #

    I am also in the same boat. How about a hybrid approach? I have also settled with VA invest program for my kid with a auto monthly contribution setup. When junior is in middle school, i am planning to roll over money from VA invest account to buy VA prepaid. At that time, we will have a higher probability of knowing about his school choice in a broader sense (at least instate or out of state). what do you think of this approach?

    • Retire Before Dad October 9, 2015 at 11:26 am #

      I suppose a hybrid approach is an option. I hadn’t thought of that. I should say most of my planning is focused on teaching my kids that an in state option is likely the best value. But I wanted to leave open the option of out of state. In the case you mention, as long as the value is still good, this could be a way to save some money.

  5. Lee December 9, 2015 at 11:11 am #

    Great article. I’m relying on your wonderful article to make some decisions for my daughter’s college fund. But I’m running into correlation issues between the funds listed in your article and what you see at the Virginia 529 website.

    I have been trying to find Vanguard Small-Cap Domestic Equity (VSCIX) in your article under Age-based Evolving Portfolios in the Virginia 529 invest but with no success. Is VSCIX still being offered by Virginia 529?

    The inception date for the Vanguard Total Stock Market Index (VITSX -1997) doesn’t synch with the inception date for the same fund in the Virginia 529. What am I missing?

    • Retire Before Dad December 9, 2015 at 11:21 am #

      Thanks for reading and using my article as a guide. I do my best to keep up with changes but I’m not alerted when changes to the plan are made. We always like to see changes because usually they are meant to make the plan better.

      My last update was a few months ago. Your comment tells me I need to go back over this again to make sure it is fully up to date.

      Please go by what VA 529 says in terms of what fund selections are most current.

      I’ll go over the funds again this evening or tomorrow and add a note that funds are current with an as of date.

      Check back again soon! I hope you find this helpful.

    • Retire Before Dad December 9, 2015 at 11:19 pm #

      I looked over the available documents and confirmed the information above is accurate. I did add the three new “actively-managed funds” that were new for October 2015 (forgot to do this in October).

      As for your specific question, the Vanguard Small-Cap Domestic Equity (VSCIX) is not available as an individual investment choice. It is one of the 11 “underlying investments” that make up the age-based portfolios. So you would only have exposure to it if you invested in one of the age-based portfolio (and it would only be about 3.75% of the holding).

      As for the inception date, I’d refer to Yahoo Finance as being the more accurate number. Better yet, Vanguard is the best source. I check and it confirms Yahoo’s date.

      Let me know if you have any other questions about this program. Happy to help in this comments section (for free!). But I can’t give specific advice for your situation. I can only help with navigating this stuff and give generalized opinions.

  6. Christy January 7, 2016 at 9:47 pm #

    We have Virginia prePAID accounts for both our children (Tier 1 – 8 semesters). Our oldest will be entering college in August 2017. We are looking at which VA colleges (public and private) to apply to and I I have a question. If he attends a VA public college/university, his tuition will be covered at 100% (for 8 semesters). For a VA private college/university, how do we determine how much his prePAID account would cover per year?

    I have read that “prePAID covers the lesser of 1) contract payments made plus the actual return on the invested funds compounded annually, or 2) the highest in-state undergraduate tuition and mandatory fees at a Virginia public.” For a private VA college/university with tuition say at $32,000 … would this a ONE TIME PAYMENT, I’m assuming this is not per year… For example purposes, we paid $16,000 for a Tier 1 (8 semesters) contract. It’s refund value is now $20,000 …. does this mean we would only receive $20,000 toward the $32,000 for his first year at this VA private college/university? We would then be responsible for the additional $12,000 for the first year (plus other non-tuition costs), and then for all three additional years. For example purposes, I am not factoring in scholarships or financial aid.

    Thank you for any insight you can provide.

    • Retire Before Dad January 7, 2016 at 10:22 pm #

      I don’t have an immediate answer for you. I’d have to dig into the documentation. I need to update this post with withdrawal rules. Perhaps another reader may want to chime in. Good luck

  7. Joanne Razo July 7, 2016 at 2:00 pm #

    Hello, RBD. First, THANK YOU for blogging on this subject. I am torn between the different VA529 plans and your post is most certainly helpful and informative.

    Question for you: have your VA529 inVest been negatively impacted by the recent Brexit debacle? Admittedly, I am hesitant with the inVest plan being market driven, but I also do not want to wait until an open enrollment period to open a prePAID account, as I’d like to open a VA529 account sooner rather later. My oldest child is 13 years old and I regret not opening one sooner!

    • Retire Before Dad July 7, 2016 at 3:04 pm #

      Thanks for your kind words. I was happy to write on this subject as I have three kids and already did the research.

      The investment choices are of course market driven. Be it Brexit, terrorist attacks, housing crises, or Oprah recommending stocks.

      Despite all the news, Brexit was a very short term move in stocks. What happens today means nothing with a long term view. My oldest is only four. One day of Brexit news is nothing compared to 14 more years of the stock market.

      The investment choices available are fairly diverse, and include fixed income (bonds). So most parents can find investments that fit their risk tolerance, and the age-based portfolios are a popular way to do that.

      It’s never too late to get started. So best of luck to you with your savings.

  8. Rebekah October 9, 2016 at 11:06 pm #

    Thank you for this article. We have a one year old daughter and are trying to decide what the best choice is. I feel totally out if my element looking at the different options. One thing I am struggling with is that since graduating from Virginia Tech seven years ago tuition has just about doubled! I can’t imagine the cost will continue to increase at the pace but who knows! Any thoughts on the recent jump in tuition rates and if prepaid would be wise if limiting to Virginia schools was not a concern? Thank you 🙂

    • Retire Before Dad October 10, 2016 at 8:19 pm #

      Hi Rebekah
      It is overwhelming! I hope that I am helping others make decisions based on the research I’ve done on VA 529.

      That’s disheartening that tuition has almost doubled in 7 years. I’m in the camp that college tuition rates are unsustainable. So for my family, pre-paid doesn’t make sense based on that. It may work for others.

      Students just aren’t getting enough value out of some degrees. We’ve seen the for-profit colleges get hit first. The next batch is the private colleges. I suspect it’s already happening to some of them. The price of one year is outrageous for some private colleges.

      Perhaps college costs could be lowered with virtual classes in the future. Think Oculus Rift for the classroom. I expect we should see this in the coming years. But the quality of that kind of education may not be for everyone. Technology may be the solution to rising costs. The currently trajectory can’t continue.

      A friend of mine made a documentary on the subject of student loans and increasing costs. Check out his website. It will hopefully be available to stream and on some public and cable channels soon.

  9. Mrs Chedda @ The Chedda November 20, 2016 at 9:05 am #

    Hi RBD! Just wanted to say that I referred to this blog post several times when I was making my 529 investment decision a few months ago and it was seriously helpful! Like you mention, the VA 529 website leaves much to be desired, and it’s great to find a summary of all the plans aimed at the layperson.

    I ended up going with the inVest plan and after I invested, the fees were lowered by 1/3 and it was rated Gold by Morningstar (one of only 3 plans in the country to get that rating).

    So, just wanted to let you know how helpful this was to me!

    • Retire Before Dad November 20, 2016 at 2:28 pm #

      Glad you found this web site helpful. I’m just another Virginia parent trying to make sense of the VA 529 program. Kids are 4, 3, and 1 now. It was good to hear the fees were lowered. I’d like to see a better website for parents participating in the inVest among other things. But low fees is always good!

  10. NAH January 18, 2017 at 11:08 am #

    This is a fantastic summary! Thank you!

    I completely agree about the horrible user interface for managing the accounts. I have some InVest accounts that are already invested in age-based funds, and I want to change them to index funds. I cannot figure out how/if you can change your investment from one fund to another. Do you happen to know how I can do that from their website?? I’m hoping to do it online, but maybe I will need to call them….

    • Retire Before Dad January 18, 2017 at 11:17 am #

      Thanks a lot. I do my best to keep things up to date.

      You can transfer between funds online. I’ve done it. Perhaps I should create a tutorial on it! It’s astonishing how difficult they make this.

      You do it from the menu when logged into your account. Go to Manage My Accounts. Then Forms/Other Account Changes. Then (all the way at the bottom) Rollover/Investment Direction/Transfer. Finally from here, you can follow the prompts to make the transfer. But jeez, so complicated! Make sure to read everything and choose “Move Money to another inVest…”. Also be sure to hit next and save to get a confirmation. If I recall correctly it takes a few days to actually see the transfer.
      Good luck!

      • Caroline Baird March 4, 2017 at 10:56 am #

        We used the hybrid approach for both kids, purchased one year of prepaid for each kid and opened a College America 529 plan through an employer for each kid as well. Our son is a sophomore now at a VA school and has used both years of prepaid for tuition (we easily transferred daughters prepaid to him) and his 529 for room and board. Our daughter will definitely not be attending a VA school because she wants to play ice hockey in college, something we could not have predicted when we originally started saving for college. We are going to rollover the College America 529 plan to VA 529 Invest due to the higher cost funds in the College America plan and the fact that our financial adviser will not return our calls with questions. Regarding the College America website, it is not at all intuitive when it comes to managing/changing your contributions and it also has separate accounts for each fund which is cumbersome. Thanks for the great article, it is really helpful!

        • Retire Before Dad March 8, 2017 at 8:39 am #

          Thanks for sharing you experience. This article is mostly from the perspective of an early stage family. Interesting to hear your daughter will be out of state to play a sport. Definitely not predictable. Glad to hear you could transfer it easily to you son.

          I also think a hybrid approach is a good idea, but through having other non-VA ways to pay for school. Like regular savings and cash flow from a job. good to have some flexibility.

          Thanks again for you contribution to the comments section.

  11. Patrick Dundon November 14, 2017 at 2:59 am #

    Hi RBD,
    Wow, just wow. Today is the first time logging in to my new account and I’m a little appalled at the clunkyness of the web experience. I am all in VITSX. Can I add other funds to make a mix?

    • Retire Before Dad November 14, 2017 at 8:01 am #

      Hi PD,
      Yeah, you’ve chosen the right words. And it was updated this year.

      What is normal and easy on every other investment site is a little different on VA 529. Each holding or fund is considered an “account”. I just went in to look how I opened additional holdings and had some trouble! Seems this may have changed. One option, I believe, is you can transfer a portion of your existing account to another fund by going to Manage My Accounts/Forms Other Account Changes/Rollover-Investment Direction-Transfer. It steps you through the process. I think you can transfer to a new fund there.

      Otherwise, I believe you may need to initiate another account from the far left tab. However, you might call to confirm that. That is more for adding a new child but maybe a new fund too since each new fund is considered an account. I added three funds when my daughter was born. I haven’t added an additional fund to any kids in about 5 years since I added one fund to my son. So I can’t quite remember how it’s done and I don’t want to go through the motions now.

      So clunky.

  12. DAVID WEBB December 5, 2017 at 9:35 pm #

    Thank you so much! When I first selected the Va Invest and saw the website, I thought I’d been “punked”! I now know that I’m not crazy or alone!

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