Choosing between 529 Plans

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
dhuser
Posts: 26
Joined: Tue Feb 26, 2019 9:59 am

Choosing between 529 Plans

Post by dhuser » Tue Dec 03, 2019 1:45 pm

My wife and I had our first kid and we are now in the process of researching a 529 plan to get started for the new kiddo. We've determined that we want to set up the account, despite our state (KY) offering no tax benefits. Additionally, we have relatives who would like to contribute to this account as well. After some research, we've narrowed it down, but I was hoping for some insight as to any differentiating factors (good or bad) that would swing our decision from those who have used the state plans below.

Desires:
- Easy to use platform for us as account owners
- Easy to donate to for relatives (one-off donations for Christmas, birthdays, etc...)
- Low on-going program costs
- Ideally Vanguard funds
- use some money towards K-12 education down the road, in addition to

States still in the running: (in no particular order)
Illinois
Ohio (potentially using Vanguard Wellington)
Nevada (already have accounts at Vanguard)
New York (lowest fees)
Virginia

MrCastaway
Posts: 27
Joined: Sat May 18, 2019 7:50 pm

Re: Choosing between 529 Plans

Post by MrCastaway » Tue Dec 03, 2019 1:55 pm

Have you considered the Utah plan? We ended up with that one after considering the other ones on the list. It has low fees as a wide variety of investment options, vanguard and dfa. The gift process for others to contribute is set up very well.

There are over 30 individual investments you can choose from in addition to the age based options.
Last edited by MrCastaway on Tue Dec 03, 2019 1:58 pm, edited 3 times in total.

retired@50
Posts: 615
Joined: Tue Oct 01, 2019 2:36 pm

Re: Choosing between 529 Plans

Post by retired@50 » Tue Dec 03, 2019 1:55 pm

I was under the impression Utah had a good low-cost plan that uses Vanguard as well. Perhaps it's something to look into.

Regards,

Hukedonfonix4me
Posts: 145
Joined: Thu Oct 13, 2016 3:00 pm

Re: Choosing between 529 Plans

Post by Hukedonfonix4me » Tue Dec 03, 2019 1:56 pm

We chose the NY plan for the reasons you state above. We have opened and contributed for ~18 months so far. No complaints!
"While some mutual fund founders chose to make billions, he chose to make a difference." | -The Bogleheads' Guide to Investing

lakpr
Posts: 3051
Joined: Fri Mar 18, 2011 9:59 am

Re: Choosing between 529 Plans

Post by lakpr » Tue Dec 03, 2019 1:57 pm

I have my kids' funds in NY 529 plan, and chose age-based moderate portfolio. You cannot go wrong with the NY plan.

WhiteMaxima
Posts: 2024
Joined: Thu May 19, 2016 5:04 pm

Re: Choosing between 529 Plans

Post by WhiteMaxima » Tue Dec 03, 2019 2:00 pm

I would choose UTAH, NY plan. They all offer Vanguard fund with many options.

informal guide
Posts: 281
Joined: Mon Aug 29, 2016 10:26 am

Re: Choosing between 529 Plans

Post by informal guide » Tue Dec 03, 2019 2:01 pm

I chose the Vanguard Nevada Plan for convenience - to keep things simple. Plan balances are shown on your Vanguard.com logon and statements and they count for earning Vanguard Flagship or Voyager status (whatever that is worth)

retiredflyboy
Posts: 201
Joined: Sun Dec 02, 2018 10:02 pm

Re: Choosing between 529 Plans

Post by retiredflyboy » Tue Dec 03, 2019 2:04 pm

My wife and I have been using the Illinois (Bright Start) 529 for our 2 grandchildren for about 4 years. As you probably know, Illinois is one of a handful of 5 star rated states and has funds with very low expenses. We use the age based plans for a one and done solution. You are very responsible and forward thinking to be starting so early, which is the key! I know you didn’t ask about this, but make sure you are fully funding your retirement before doing too much on the 529. You can borrow, pay as you go, scholarships, kids work summers etc. for college but no such programs for retirement. Not in any discouraging you to get started in college savings, but wanted to preach a bit on retirement since I am much older and retired myself. We put retirement ahead of college, and did all the things I mentioned above and am now glad we did. Perhaps you are able to do both! If so, good for you.
Facts are stubborn things. Everything works until it doesn’t.

livesoft
Posts: 68563
Joined: Thu Mar 01, 2007 8:00 pm

Re: Choosing between 529 Plans

Post by livesoft » Tue Dec 03, 2019 2:26 pm

I haven't seen a bad plan mentioned in this thread.

Perhaps another criteria would be a state plan where any of the relatives who contribute would get a tax break. Indeed, it is perfectly legal and fine to have multiple 529 plans for the same student. It turned out that my spouse and I had separate plans for each of our children and saved us a few thousand dollars that would not have been possible if only one of us had own a 529 plan.
Wiki This signature message sponsored by sscritic: Learn to fish.

WhiteMaxima
Posts: 2024
Joined: Thu May 19, 2016 5:04 pm

Re: Choosing between 529 Plans

Post by WhiteMaxima » Tue Dec 03, 2019 2:38 pm

State charges fees plus the vanguard so the total fee are not low. I think State uses 529 as state budget revenue. So choose lowest total fee (state+vanguard).

snailderby
Posts: 453
Joined: Thu Jul 26, 2018 11:30 am

Re: Choosing between 529 Plans

Post by snailderby » Tue Dec 03, 2019 2:39 pm

I would go with NV if you want the convenience of managing everything with the same Vanguard login. Otherwise, if you're looking for Vanguard funds with the lowest fees, IL (Bright Start) and NY are good options.

GetMeToRetirement
Posts: 30
Joined: Thu Jan 18, 2018 9:26 am

Re: Choosing between 529 Plans

Post by GetMeToRetirement » Tue Dec 03, 2019 2:49 pm

MrCastaway wrote:
Tue Dec 03, 2019 1:55 pm
Have you considered the Utah plan? We ended up with that one after considering the other ones on the list. It has low fees as a wide variety of investment options, vanguard and dfa. The gift process for others to contribute is set up very well.
Agreed. We have two 529s from Utah (callled "My529s"), and the website generates a hyperlink that you can email/text/whatever to anyone who wants to make a special/one-time contribution. It's so simple that the grandparents were able to donate with no follow-up questions!

User avatar
Wiggums
Posts: 1911
Joined: Thu Jan 31, 2019 8:02 am

Re: Choosing between 529 Plans

Post by Wiggums » Tue Dec 03, 2019 2:54 pm

livesoft wrote:
Tue Dec 03, 2019 2:26 pm
I haven't seen a bad plan mentioned in this thread.

Perhaps another criteria would be a state plan where any of the relatives who contribute would get a tax break. Indeed, it is perfectly legal and fine to have multiple 529 plans for the same student. It turned out that my spouse and I had separate plans for each of our children and saved us a few thousand dollars that would not have been possible if only one of us had own a 529 plan.
+1

Broken Man 1999
Posts: 3451
Joined: Wed Apr 08, 2015 11:31 am

Re: Choosing between 529 Plans

Post by Broken Man 1999 » Tue Dec 03, 2019 3:11 pm

informal guide wrote:
Tue Dec 03, 2019 2:01 pm
I chose the Vanguard Nevada Plan for convenience - to keep things simple. Plan balances are shown on your Vanguard.com logon and statements and they count for earning Vanguard Flagship or Voyager status (whatever that is worth)
My choice as well. I like the convenience of one logon for our investment accounts.

The Vanguard Nevada 529 plan might be a tiny bit more expensive than other plans using Vanguard funds, but 529 plans for our grandchildren are not going to grow for decades and decades. And, at the time I was opening the plans, the Florida 529 plan was more expensive. I opened each of the four plans in the Florida 529 plan because the initial amount required to open was very low. As each of the plans reached $3,000, I transferred them to Vanguard.

Convenience trumps a tiny bit of difference in ERs for me.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

User avatar
RickBoglehead
Posts: 4864
Joined: Wed Feb 14, 2018 9:10 am
Location: In a house

Re: Choosing between 529 Plans

Post by RickBoglehead » Tue Dec 03, 2019 3:21 pm

Often people forget to mention that these plans change all the time. The cheapest plan today might not be the cheapest plan in 2 years. In addition, it's all relative (pun intended).

Also keep in mind that WHAT you invest in affects costs. Not Vanguard Funds vs. other, but Vanguard vs. Vanguard. If you look at the options in the different plans, some give you more flexibility to pick what you want, but charge you more for that option. So, depending WHAT investments you pick, the costs can line up quite differently. For example, I have the Utah plan with 100% in Vanguard Institutional Index (i.e. S&P 500), since there is no Total Stock Market option. I pay 0.15% ER. In an initial look, the Nevada plan looks cheaper, but if you go with that same investment the cost is the same, 0.15% ER. For me, it's not worth moving to get one login, since I only log in maybe 2 times a year. I import the transactions into Quicken just fine. And, for those that don't know, Vanguard has an option called Outside Investments, where you can key in outside holdings - no userids or passwords required. Where you know the stock symbol (some 529 plans create their own) you can type in the symbol and the holdings and Vanguard will keep the value updated so you get a "total picture". I update the shares quarterly, sometimes more often (Utah hits expenses monthly and earnings quarterly). I use Outside Investments for all my non-Vanguard holdings including house value, etc. to show a pretty close "Net Worth".

If one plan has a 0.13% ER and the other has a 0.15% ER ratio, if the account held $50,000 that's $10 a year difference. As Broken Man 1999 noted, these accounts aren't growing for decades and decades, at most just under $20 years.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

Topic Author
dhuser
Posts: 26
Joined: Tue Feb 26, 2019 9:59 am

Re: Choosing between 529 Plans

Post by dhuser » Tue Dec 03, 2019 5:48 pm

Thank you all for the helpful advice. I’ll definitely add Utah to the list to research further. I am leaning towards Nevada, but we’ll have to decide about the $3,000 minimum which I see as the only potential drawback. Maybe we’d open an account with a lower amount and look to rollover into a Nevada account in a year or so.

LeftCoastIV
Posts: 67
Joined: Wed May 01, 2019 7:19 pm

Re: Choosing between 529 Plans

Post by LeftCoastIV » Tue Dec 03, 2019 5:49 pm

We went with Utah and selected an age-based fund, to put it on auto-pilot and not have to think about re-balancing as college approaches.

Topic Author
dhuser
Posts: 26
Joined: Tue Feb 26, 2019 9:59 am

Re: Choosing between 529 Plans

Post by dhuser » Tue Dec 03, 2019 5:50 pm

retiredflyboy wrote:
Tue Dec 03, 2019 2:04 pm
My wife and I have been using the Illinois (Bright Start) 529 for our 2 grandchildren for about 4 years. As you probably know, Illinois is one of a handful of 5 star rated states and has funds with very low expenses. We use the age based plans for a one and done solution. You are very responsible and forward thinking to be starting so early, which is the key! I know you didn’t ask about this, but make sure you are fully funding your retirement before doing too much on the 529. You can borrow, pay as you go, scholarships, kids work summers etc. for college but no such programs for retirement. Not in any discouraging you to get started in college savings, but wanted to preach a bit on retirement since I am much older and retired myself. We put retirement ahead of college, and did all the things I mentioned above and am now glad we did. Perhaps you are able to do both! If so, good for you.
Thanks, and yes we’re both prioritizing our retirement over throwing a lot of money at this plan. However, we both work and value our education and hope to be able to lighten the burden for our son, should he choose to pursue it.

Topic Author
dhuser
Posts: 26
Joined: Tue Feb 26, 2019 9:59 am

Re: Choosing between 529 Plans

Post by dhuser » Tue Dec 03, 2019 5:52 pm

RickBoglehead wrote:
Tue Dec 03, 2019 3:21 pm
Often people forget to mention that these plans change all the time. The cheapest plan today might not be the cheapest plan in 2 years. In addition, it's all relative (pun intended).

Also keep in mind that WHAT you invest in affects costs. Not Vanguard Funds vs. other, but Vanguard vs. Vanguard. If you look at the options in the different plans, some give you more flexibility to pick what you want, but charge you more for that option. So, depending WHAT investments you pick, the costs can line up quite differently. For example, I have the Utah plan with 100% in Vanguard Institutional Index (i.e. S&P 500), since there is no Total Stock Market option. I pay 0.15% ER. In an initial look, the Nevada plan looks cheaper, but if you go with that same investment the cost is the same, 0.15% ER. For me, it's not worth moving to get one login, since I only log in maybe 2 times a year. I import the transactions into Quicken just fine. And, for those that don't know, Vanguard has an option called Outside Investments, where you can key in outside holdings - no userids or passwords required. Where you know the stock symbol (some 529 plans create their own) you can type in the symbol and the holdings and Vanguard will keep the value updated so you get a "total picture". I update the shares quarterly, sometimes more often (Utah hits expenses monthly and earnings quarterly). I use Outside Investments for all my non-Vanguard holdings including house value, etc. to show a pretty close "Net Worth".

If one plan has a 0.13% ER and the other has a 0.15% ER ratio, if the account held $50,000 that's $10 a year difference. As Broken Man 1999 noted, these accounts aren't growing for decades and decades, at most just under $20 years.
I use the outside investments feature as well and it is a usual “snapshot” tool. And thanks for the point(/reminder) that that ER examination to the “n”th degrees nets out to little dollars over the course of this investment timeline.

Topic Author
dhuser
Posts: 26
Joined: Tue Feb 26, 2019 9:59 am

Re: Choosing between 529 Plans

Post by dhuser » Tue Dec 03, 2019 5:54 pm

livesoft wrote:
Tue Dec 03, 2019 2:26 pm
I haven't seen a bad plan mentioned in this thread.

Perhaps another criteria would be a state plan where any of the relatives who contribute would get a tax break. Indeed, it is perfectly legal and fine to have multiple 529 plans for the same student. It turned out that my spouse and I had separate plans for each of our children and saved us a few thousand dollars that would not have been possible if only one of us had own a 529 plan.
I’ll mention that to our out-of-state relatives. Any idea how easy is withdrawal for non-parent owners of accounts? Do you send multiple checks to an institution from the different accounts used?

livesoft
Posts: 68563
Joined: Thu Mar 01, 2007 8:00 pm

Re: Choosing between 529 Plans

Post by livesoft » Tue Dec 03, 2019 6:15 pm

dhuser wrote:
Tue Dec 03, 2019 5:54 pm
I’ll mention that to our out-of-state relatives. Any idea how easy is withdrawal for non-parent owners of accounts? Do you send multiple checks to an institution from the different accounts used?
I have always had the 529 plans send a check made out to me which I put in my checking account, then I pay the school with a cash-back credit card. This has been hassle-free for me for two children through masters degrees.
Wiki This signature message sponsored by sscritic: Learn to fish.

wfrobinette
Posts: 753
Joined: Fri Feb 20, 2015 3:14 pm

Re: Choosing between 529 Plans

Post by wfrobinette » Wed Dec 04, 2019 5:08 pm

dhuser wrote:
Tue Dec 03, 2019 1:45 pm
My wife and I had our first kid and we are now in the process of researching a 529 plan to get started for the new kiddo. We've determined that we want to set up the account, despite our state (KY) offering no tax benefits. Additionally, we have relatives who would like to contribute to this account as well. After some research, we've narrowed it down, but I was hoping for some insight as to any differentiating factors (good or bad) that would swing our decision from those who have used the state plans below.

Desires:
- Easy to use platform for us as account owners
- Easy to donate to for relatives (one-off donations for Christmas, birthdays, etc...)
- Low on-going program costs
- Ideally Vanguard funds
- use some money towards K-12 education down the road, in addition to

States still in the running: (in no particular order)
Illinois
Ohio (potentially using Vanguard Wellington)
Nevada (already have accounts at Vanguard)
New York (lowest fees)
Virginia
I use whatever Vanguard offers. Don't know what state it is.

retiredflyboy
Posts: 201
Joined: Sun Dec 02, 2018 10:02 pm

Re: Choosing between 529 Plans

Post by retiredflyboy » Wed Dec 04, 2019 9:48 pm

Here’s what Morningstar had to say about Bright Start in October 2019:

“The Illinois Bright Start Direct-Sold College Savings Program boasts an impressive fund lineup, strong plan oversight, and competitive fees. It remains a top choice for college savers and retains its Morningstar Analyst Rating of Gold. Illinois residents also enjoy further benefits–contributions up to $10,000 can be deducted when calculating state income taxes”
Facts are stubborn things. Everything works until it doesn’t.

Post Reply