College savings plan Missouri MOST wins 'silver' rating from investment company

Missouri State Treasurer Scott Fitzpatrick reported the Missouri MOST 529 college savings plan has won a silver medal rating by Illinois-based Morningstar — one of 11 plans nationwide so recognized.

Morningstar, an investment research concern, said in a published review MOST's "industrious approach to overseeing this plan buffers investors from the sharpest gales of the 529 industry."

According to Investopedia, a 529 plan "is a tax-advantaged savings plan designed to help pay for education."

Originally limited to post-secondary costs, 529 plans — such as Missouri MOST — were expanded in 2017 to cover K-12 education and in 2019 to pay for certain apprenticeship programs. The two major types of 529 plans are savings plans and prepaid tuition plans.

The chief benefit of a 529 account, according to Investopedia, is the savings plan grows tax-deferred and withdrawals are tax-free if used for qualified education expenses.

Morningstar, in assigning the silver recognition to Missouri MOST, used cost, performance, tax benefits and oversight in its 529 evaluations.

Three 529 plans — in Illinois, Michigan and Utah — garnered gold medal awards. The Utah plan is the only one to maintain Morningstar's top ranking since the firm started its 529 reviews in 2012.

"MOST in Missouri offers a powerful mix of well-resourced and collaborative investment teams, tireless state oversight and enticing fees," Morningstar said in its review.

Early in 2021, assets under management in Missouri MOST crossed the $4 billion threshold for the first time, an increase of $1 billion since Fitzpatrick began his tenure as state treasurer in January 2019, according to a release from Fitzpatrick's office.

Seven plans earned Morningstar's lowest ratings — located in Maine, Nevada, New Jersey, New Mexico, South Dakota and Wisconsin.

"Most negative-rated plans charge high fees investors are better off avoiding. Prices can depend somewhat on how a plan is distributed — plans that are sold exclusively through financial advisers often lay on commission fees to compensate advisers for their advice to consumers," Morningstar reported. "All of the top-ranked plans are direct-sold, while five of the seven at the bottom of the list are adviser-sold."

Missouri MOST has more than 183,000 active accounts under management with contributions eligible for state tax deductions enabling families to save up to $864 annually. Assets in the MOST 529 plan accounts grow tax-free, Fitzpatrick said.

Information about Missouri's 529 plan may be found at www.MissouriMOST.org.

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