| Analyzing 529 College Savings Plan Fees and Expenses | Analyzer Home | Disclaimer | Glossary |
| Administration or Administrative Fee | |
| A charge for expenses incurred in the administration of a 529 college savings plan, which may include services such as record keeping, auditing, and preparing and printing statements and reports. This fee is deducted from your holdings based on a percentage of your assets in the plan. You can find a description of the fees and expenses charged by a plan in the disclosure statement or plan description. | |
| Annual Maintenance Fee | |
| Most 529 college savings plans charge annual maintenance fees. These fees usually range from $10 to $50. Many plans reduce or eliminate this fee for residents, if you make automatic contributions, or if you maintain a certain balance, typically $25,000. You can find a description of the fees and expenses charged by a plan in the disclosure statement or plan description. | |
| Breakpoints | |
| 529 college savings plans with front-end loads or sales charges may enable you to reduce front-end sales charges as the amount of your investment increases to certain levels called "breakpoints." Check the disclosure statement or plan description to see if a breakpoint will reduce the front-end sales charge. For more information on breakpoints, please read our Investor Alert -- Mutual Fund Breakpoints: A Break Worth Taking. | |
| Class | |
A single 529 college savings plan or mutual fund may offer more than one "class" of shares to investors. Each class represents a similar interest in the plan’s or fund’s portfolio, but has different fees and expenses. Here are the basic definitions of Class A, B, and C shares:
Some 529 plans and funds may offer additional classes of shares. To learn more about mutual fund classes, you can read our Investor Alert, Understanding Mutual Fund Classes. | |
| Contingent Deferred Sales Charge (CDSC) | |
| A common type of deferred sales charge in some 529 college savings plans and mutual funds. The CDSC normally declines each year and is eliminated after a number of years. | |
| Convert | |
| Sometimes a share class will convert to another class of shares after a period of time. This means that you will begin to pay the fees and expenses charged by the class to which your plan or fund was converted. You can find out whether a share class converts to another class in the disclosure statement or plan description. | |
| Deferred Sales Charge (Back-End Load) | |
| A deferred sales charge or contingent deferred sales charge (CDSC) is a charge you pay when you withdraw money from a 529 college savings plan or in an investment option within the plan. It is sometimes referred to as the back-end load. The charge may start out at 2.5% for the first year, and get smaller each year after that until it reaches zero. Not every college savings plan has a deferred sales charge. In some plans, a deferred sales charge also may be levied on certain classes of the plan. You can find a description of the fees and expenses charged by a plan’s investment funds in the disclosure statement or plan description. | |
| Disclosure Statement or Plan Description | |
| Similar to a mutual fund’s prospectus, a 529 college savings plan’s disclosure statement or plan description (these terms are interchangeable) provides detailed information about the plan, including investment options and fees and expenses. You can find the disclosure statement or plan description on the 529 plan’s Web site, where it is usually in a downloadable PDF-format. On some fund Web sites, you must first click on “start to enroll” to get to a downloadable disclosure statement or plan description link. | |
| Enrollment Fee | |
| Several 529 college savings plans charge a minimal enrollment fee. Currently, the highest enrollment fee is $90. Most enrollment fees are under $50. You can find a description of the fees and expenses charged by a plan in the disclosure statement or plan description. | |
| Foregone Earnings | |
Foregone earnings is the amount you could have earned on your investment if the money spent on fees and expenses was invested. The expense analyzer calculates foregone earnings by taking the money used to pay fund fees and expenses and compounding it at the rate of return you selected. Deferred sales charges are not included in this calculation because you only pay them when you sell the investment.For example, if you invest $10,000 in a fund with a 5% sale charge, then your net investment is $9,500. If the fund earned a return of 10%, and you held the shares for 1 year, then you did not receive $50 (10% x $500) in earnings. The $50 is the money you did not earn because your $500 was not invested. The payment of total annual fund operating expenses and other expenses and fees also would result in foregone earnings. By purchasing and holding any mutual fund, investors will incur some level of fees and expenses. This figure should primarily be used to compare the opportunity cost of sales charges and expenses across mutual funds. | |
| Management or Marketing Fee | |
| A charge paid to the 529 college savings plan’s managers for their services, which may include compensation for advising you about the plan as well as marketing expenses. The fee is based on a percentage of your assets in the plan. You can find a description of the fees and expenses charged by a plan in the disclosure statement or plan description. | |
| Mean | |
The average of several values. The mean value is calculated by adding up all the values and dividing by the number of values in the set.Example: Find the mean of these expense ratios: | |
| Median | |
This is the middle value in a set of data.Example: Find the median of these expense ratios: | |
| Sales Charge (Front-End Load) | |
Several college savings plans charge a sales charge when you buy certain investment options within a plan or purchase a plan through a broker or investment adviser instead of directly from the state. For example, suppose you want to spend $10,000 to purchase a 529 plan, and the plan imposes a front-end sales charge of 5%. You will be charged $500, and you will receive an investment with a market value of $9,500. Some plans may provide a discount if you:
Read your plan’s disclosure statement or plan description to learn whether its investment funds impose a sales charge or load, and, if so, whether discounts or breakpoints are available to you. | |
| Total Fees | |
| The total of sales charges, management or marketing fee, administration or administrative fee, underlying fund expenses, and other expenses and fees charged by a 529 college savings plan over the time period you selected. | |
| Total Sales Charges | |
| The total of any front-end sales charges (front-end load) or deferred deferred sales charges sales charges. | |
| Underlying Fund Expenses | |
Because 529 college savings plan portfolios typically invest in a number of funds, they bear part of the fees and expenses of these underlying funds. This expense is expressed as a percentage of a fund's assets. These are fees you do not directly pay, but which are taken out of the fund's assets. Fund expenses include:
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