Start saving up for your kid's college years today with these top 529 accounts

When it comes to helping your child pay for their college education, the astronomical cost of tuition can be overwhelming. Taking advantage of a 529 college savings plan, and the many benefits they offer, can help parents sleep better at night knowing their children won't one day be burdened by overwhelming student loan debt.

A 529 is a state-sponsored education savings account designed to encourage parents to invest in their child's future by allowing earnings to grow tax-free. Withdrawals from a 529 are also tax-free as long as they're used for qualified educational expenses.

There's more good news when it comes to choosing a 529 college savings account: You're not limited to your own state's plan. You can shop around for a 529 that offers the lowest fees and the best investment choices, allowing you to squeeze as much as possible out of your dollars. So, a California resident could potentially sign up for Utah's plan if they thought it was a better fit for them. That said, it's worth remembering that some states do offer better incentives for their residents including Idaho and New York.

To help you in your research of college savings accounts, CNBC Select reviewed and analyzed more than a dozen 529 plans, comparing basic features like fees, expenses and investment choices. Here are our top picks that can help you maximize your returns for this major investment. (See our methodology for more information on how we chose the best 529 plans.)

• my529 (Utah)
• Bright Start College Savings (Illinois)
• CollegeAdvantage (Ohio)
• Michigan Education Savings Program (MESP)
• ScholarShare 529 (California)
• Invest529 (Virginia)
• New York's 529 College Savings Program
• Oregon College Savings Plan
• U.Fund College Investing Plan (Massachusetts)
• UNIQUE College Investing Plan (New Hampshire)

my529 (Utah) — formerly called Utah Educational Savings Plan (UESP) — is a direct-sold college savings account available to residents of any state. Account holders can choose from age-based portfolios, which automatically rebalance to ensure the right asset allocation, moving toward more conservative investments by the time their child is ready to head off to college. There are also other options including risk-based and customizable choices. Investment options include funds from Vanguard and PIMCO. Utah residents can get tax benefits and there are no minimum amounts to meet.

The direct-sold Bright Start College Savings Program (Illinois) is managed by Union Bank & Trust. There are age-based investing options, as well as static and individual options from firms like T. Rowe Price and Vanguard. There are no state residency requirements, but Illinois residents get tax deductions. You don't need to reach any minimums.

With the CollegeAdvantage (Ohio) 529 plan, anyone can sign up. There's a good mix of investment options (including FDIC-insured accounts), low fees and plans from top companies like Vanguard, Dimensional Fund Advisors and Fifth Third Bank. There's just a minimum contribution amount of $25 and Ohio residents can get a tax deduction.

The Michigan Education Savings Program (MESP) offers a mix of Vanguard funds, Schwab ETFs and TIAA-CREF funds to anyone (you don't have to be a Michigan resident). You can select from risk-based, enrollment year-based and guaranteed investment funds once you enroll. There's a $25 minimum contribution or a $15 per pay period via payroll deduction. Michigan residents get a tax deduction.

TIAA-CREF manages ScholarShare 529 (California), where residents of any state are welcome. California does not offer a state tax deduction for contributions to the plan and there are no minimums. Funds are from reputable companies such as Dimensional Fund Advisors, T. Rowe Price and Vanguard. Portfolio options include enrollment-based, multi-fund and single funds.

Invest529 (Virginia) is a direct-sold college savings plan that's available to residents of any state. It offers low fees, a wide range of investment options and tax benefits for Virginia residents. There's just a $10 minimum to get started.

Managed by Ascensus College Savings, New York's 529 College Savings Program is a direct-sold plan featuring Vanguard mutual funds. It is available to residents of any state, comes with low fees and has plenty of investment options. New York residents are eligible for a state tax deduction for their contributions to the education savings account. There is no minimum contribution to start saving.

The Oregon College Savings Plan has both enrollment-based (age-based) and static portfolio choices featuring a variety of different mutual funds. Anyone regardless of state residence can open an account, and the minimum initial contribution amount is $25 per investment portfolio (subsequent contributions have a $5 minimum). There are no tax deductions offered.

The U.Fund College Investing Plan (Massachusetts) is a direct-sold education savings account that's managed by Fidelity Investments and that invests in Fidelity mutual funds. There are both age-based and static investing options, as well as an interest-bearing deposit account. This account is open to residents of any state, but Massachusetts residents particularly will receive a tax deduction. While there's no minimum to open this 529 savings plan, there's a minimum $15 per month (or $45 per quarter) contribution with the automatic investment plan.

The direct-sold UNIQUE College Investing Plan (New Hampshire) is managed by Fidelity Investments and features Fidelity mutual funds. You have both age-based and static options to choose from, including an interest-bearing deposit account. There are no state residency requirements and New Hampshire residents don't receive a tax deduction. While there's no minimum to open this 529 savings plan, there's a minimum $15 per month (or $45 per quarter) contribution with the automatic investment plan.

• 529 plan rules
• 529 plans by state
• How do I open a 529 plan?
• How do I fund a 529 account?
• How much does it cost to open a 529 account?
• Can I use a 529 plan for more than one child?
• What if I don't use my 529 plan?
• Coverdell education savings account vs. 529 plan
• Does Fidelity offer a 529 account?
• Can I use Vanguard 529 in any state?

Although 529 education savings accounts are traditionally used for covering future college costs, they're not limited to that. 529 funds may also be used for private elementary through high school tuition (up to $10,000 per year per student), depending on the state's plan. Note that not all states offer this.

And just like your earnings growing tax-free, your withdrawals are also tax-free as long as they're used for qualified educational expenses — think tuition, room and board, books and tech equipment. Plus, assets held in a 529 plan aren't weighed as heavily toward your expected family contribution (EFC), meaning the amount you save won't negatively impact eligibility for federal aid.

529 plans vary by state and, again, you're not limited to your own state's plan. It's generally advised, however, to first look at your home state's 529 plan offerings since some states offer incentives to their residents. Start by browsing 529 plans by state, where you can also compare your home state's plan to others in different states.

You can work with a financial advisor to open a 529 college savings account or you can choose a direct-sold plan by yourself. Plans sold by financial advisors tend to be more expensive due to higher fees. Don't forget that some professionals may not look out for your best interests, encouraging you to select investments that give them a higher commission. If you go the financial advisor route, make sure to do your research — asking for 529 account recommendations from trusted friends and family members is a great starting point.

Opening a 529 plan yourself simply requires that you visit the plan's website and fill out an enrollment form. Information you'll need includes your full name, Social Security number and the same for your beneficiary. Then, select your investments and fund the account.

When you open a 529 education savings account, you'll be asked how you want to contribute funds. Your options include making a one-time electronic funds transfer, mailing a check, scheduling recurring payments from your bank account or through payroll deductions. Some 529 plans may require minimum contribution amounts depending on the funding method.

So, for example, if you have cash set aside in a high-yield savings account like the LendingClub High-Yield Savings, you could transfer funds via one large lump sum or consistent amounts to a 529 college savings account.

Most 529 plans don't charge you a fee for opening an account, though you will be required to make an initial deposit to start choosing investments. There are, however, fees you will need to pay to maintain your account: underlying and administrative fees. Underlying fees go toward funds you choose within your portfolio — these amounts are deducted by the funds themselves. Your 529 plan charges administrative fees for the upkeep of your account. Both types of fees are a percentage of the balance in your account.

A 529 plan allows you to only name one beneficiary at a time — when you make withdrawals, you can only do so for this person. Parents who have more than one child can set up a single account and change the beneficiary later on. So if you use part of your savings for one child, the remaining balance can be used for additional children, as long as you update the beneficiary. Otherwise, you can open separate 529 college savings accounts for each child.

You can transfer your 529 education savings account to another child, your grandchild or use it for your own qualified educational needs if your child winds up getting large grants or scholarships, or doesn't go to college. You can also roll over the funds to another family member's ABLE account, which won't incur any penalties. This type of account is for individuals who are disabled before turning 26 years old and receive Social Security insurance benefits.

Another option if you don't use the cash in your 529 plan is to withdraw the funds, though you'll have to pay income taxes on that amount, plus a 10% penalty on earnings.

Roth IRA

And, as of recent legislation, unused 529 funds can be rolled over to a Roth IRA — untaxed and unpenalized — up to $35,000. This change goes into effect in 2024, but rules will still vary state by state.

A Coverdell education savings account (Coverdell ESA) is another tax-advantaged way to save for college. This investment account differs from a 529 plan in a few ways: 1) There's a much smaller annual contribution limit of $2,000 per year; 2) It's traditionally used for both private K-12 or college costs, in any state; and 3) They are less flexible with age limits and income guidelines to qualify using a Coverdell ESA, and you can't easily have others make contributions to the account.

Fidelity manages 529 plans for a few states — Arizona, Connecticut, Delaware, Massachusetts — and also has a national plan called the UNIQUE College Investing Plan (sponsored by the state of New Hampshire), which made this list ranking.

It's worth noting that cardholders of the no-annual-fee Fidelity® Rewards Visa Signature® Credit Card can earn unlimited 2% cash back on every eligible purchase, which can then be used to fund their Fidelity-managed 529 account if they have one.

Vanguard has its own Vanguard 529 College Savings Plan (sponsored by Nevada), but many other states' 529 plans offer Vanguard investment options (including those on this list). You can visit the Vanguard website to see all the states offering Vanguard management and/or investments.

There's a lot to like about a 529 college savings account: A 529 plan offers tax benefits, covers many education-related expenses and its unused cash call still be used effectively. This list is a good place to start looking for the best 529 plan for you and your family.

To determine which 529 plans offer the best underlying investments, low fees and a variety of investment choices, CNBC Select analyzed dozens of offerings and narrowed it down to a list of finalists. We looked at plans with offerings from reputable companies and investment managers, plus a variety of options to help the investor meet their goals. We didn't evaluate 529 plans based on advantages (such as lower fees) for in-state residents or prepaid college plans.

We focused on the following features when comparing the best 529 plans:

• Management fees: The plans on our list offer some of the lowest management fees, important since these fees can affect your annual balance. Even a small fraction of a percent in fees can mean thousands of dollars in savings for the investor.
• Investment returns: Past results do not guarantee the future performance of any investment. However, seeing historical patterns of returns may indicate the plan manager is doing their job well. We looked at returns over a five-year time period.
• Fund expenses: Aside from management fees, we chose plans offering the lowest maintenance fees for their underlying funds. We looked at 529 plans offering more passive types of securities like index funds, with the expense ratio being a major deciding factor. These costs also affect the amount investors will be able to save.
• Investment options: Having more choices means that parents and guardians can decide how involved they want to be when selecting their portfolios. We looked at 529 plans offering more hands-off choices, such as age-based portfolios as well as individual funds.

Each state's 529 plan may have different minimum contribution amounts. Some may not have minimum contribution amounts but do for automatic contributions, such as payroll deductions. Each state also imposes its own cumulative contribution limit.

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