Why Utah 529 instead of Vanguard 529?
Why Utah 529 instead of Vanguard 529?
Everyone recommends the Utah 529, because of the Vanguard funds. But they don't recommend the Vanguard 529.
If you are in a state with no tax advantage why not just go direct with the Vanguard 529? I must be missing something.
Thanks to anyone who can clear this up for me.
(I ask because I want to move my 529 from BrightStart to somewhere else)
If you are in a state with no tax advantage why not just go direct with the Vanguard 529? I must be missing something.
Thanks to anyone who can clear this up for me.
(I ask because I want to move my 529 from BrightStart to somewhere else)
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
Re: Why Utah 529 instead of Vanguard 529?
I have had the exact same question for a while and haven't found a clear answer. Would love to hear thoughts.
- pennstater2005
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Re: Why Utah 529 instead of Vanguard 529?
I use the PA 529 because it has Vanguard funds and I get the PA tax deduction. Not sure why folks recommend the Utah 529 over Vanguards own 529.
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Re: Why Utah 529 instead of Vanguard 529?
I use Utah 529 because it has lower ER, lower account minimums and fees, ability to create your own smoother age based plan, no jagged 25% drops every 5 years like NV 529 from Vanguard.
Re: Why Utah 529 instead of Vanguard 529?
I'm in same boat, in CA with no tax adv and want to open 529. Debating between VG and Utah.
Re: Why Utah 529 instead of Vanguard 529?
The Vanguard plan had higher expense ratios in the past than it does now.
529 plans seem to be constantly changing. I know a few years ago, the NY plan looked good, but it had no international fund option and did not include int'l in its age-based options, so I dismissed it just for that reason alone. It probably has an int'l option now.
And maybe the Pennsylvania plan didn't use Vanguard funds 10 years ago? (I don't know)
With the state plans changing so much, almost any article on 529 plans is probably out-dated. Nevertheless, through thick and thin, Utah has remained a good plan and gotten even better.
529 plans seem to be constantly changing. I know a few years ago, the NY plan looked good, but it had no international fund option and did not include int'l in its age-based options, so I dismissed it just for that reason alone. It probably has an int'l option now.
And maybe the Pennsylvania plan didn't use Vanguard funds 10 years ago? (I don't know)
With the state plans changing so much, almost any article on 529 plans is probably out-dated. Nevertheless, through thick and thin, Utah has remained a good plan and gotten even better.
Re: Why Utah 529 instead of Vanguard 529?
I use the Vanguard 529 because I already had an account with Vanguard.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
Re: Why Utah 529 instead of Vanguard 529?
I guess I am confused. I thought one had to go through one of the states' 529 plan whether it is Utah, Nevada, or some other state.
Bob
Re: Why Utah 529 instead of Vanguard 529?
NY's 529 with Vanguard funds has lower ERs than the Utah plan when I last looked...
Re: Why Utah 529 instead of Vanguard 529?
Also, total international stock index costs 0.55% from Vanguard directly. That is the main reason I did not sign up with Vanguard.
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Re: Why Utah 529 instead of Vanguard 529?
The NY529 plan went through a recent (within the last 2-3 years) redesign. The original asset manager was TIAA-CREF and their performance was not that good, the fees were also much higher like 40-60 bps. Enter into the picture Upromise Investments at the next contract renewal, then Vanguard as investment subadvisor and then came much lower fees.JamesSFO wrote:NY's 529 with Vanguard funds has lower ERs than the Utah plan when I last looked...
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Re: Why Utah 529 instead of Vanguard 529?
+1 Same here. And it's only gotten better, with the addition of the DFA and new Vanguard fund options. The other thing I've noticed is they are constantly seeking to find equivalent funds for lower cost. I use the age-based option, in that time, they've reduced costs twice. That's another plus for Utah - nothing wrong with practicing conservatism with my money.mikep wrote:I use Utah 529 because it has lower ER, lower account minimums and fees, ability to create your own smoother age based plan, no jagged 25% drops every 5 years like NV 529 from Vanguard.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Why Utah 529 instead of Vanguard 529?
I believe the "vanguard" plan IS the Nevada plan. Can you check?CABob wrote:I guess I am confused. I thought one had to go through one of the states' 529 plan whether it is Utah, Nevada, or some other state.
Re: Why Utah 529 instead of Vanguard 529?
Yes, it is the Nevada plan, or at least the low cost plan among several others offered by the State of Nevada college savings plan program.
https://nevadatreasurer.gov/collegesavings.htm
from the Vanguard website
https://personal.vanguard.com/us/whatwe ... e_overview
"The Vanguard 529 College Savings Plan is a Nevada Trust administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by State Treasurer Kate Marshall. The Vanguard Group, Inc., serves as the Investment Manager and through its affiliate, Vanguard Marketing Corporation, markets and distributes the Plan. Upromise Investments, Inc., serves as Program Manager and has overall responsibility for the day-to-day operations, including effecting transactions. The Plan’s portfolios, although they invest in Vanguard mutual funds, are not mutual funds. Investment returns are not guaranteed and you could lose money by investing in the plan."
https://nevadatreasurer.gov/collegesavings.htm
from the Vanguard website
https://personal.vanguard.com/us/whatwe ... e_overview
"The Vanguard 529 College Savings Plan is a Nevada Trust administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by State Treasurer Kate Marshall. The Vanguard Group, Inc., serves as the Investment Manager and through its affiliate, Vanguard Marketing Corporation, markets and distributes the Plan. Upromise Investments, Inc., serves as Program Manager and has overall responsibility for the day-to-day operations, including effecting transactions. The Plan’s portfolios, although they invest in Vanguard mutual funds, are not mutual funds. Investment returns are not guaranteed and you could lose money by investing in the plan."
Bruce |
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Re: Why Utah 529 instead of Vanguard 529?
I like the Nevada plan:
1. It's already on the Vanguard website, so no new passwords to require tracking
2. The Agressive Growth portfolio has an er of .25 and is 70% Total US and 30% Total International (includes small cap unlike many other international plans), which is close enough to what I want for this account
Lots of other good options in the Nevada plan (and others)
1. It's already on the Vanguard website, so no new passwords to require tracking
2. The Agressive Growth portfolio has an er of .25 and is 70% Total US and 30% Total International (includes small cap unlike many other international plans), which is close enough to what I want for this account
Lots of other good options in the Nevada plan (and others)
- in_reality
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Re: Why Utah 529 instead of Vanguard 529?
Utah has one primary advantage in my opinion. Remember this is a college saving account where you may be facing a rather set timeframe in which to use the money.
In that regard, Utah has a better selection of shorter term bond funds.
The bond funds offered by the Vanguard/Nevada plan are all intermediate term (see https://personal.vanguard.com/us/funds/ ... ios/bytype). Utah offers a couple of short term ones: (1) Vanguard Short-Term Investment-Grade Fund (VFSIX) and (2) Vanguard Short-Term Bond Index Fund (VBIPX) [both of which have a Risk potential of 1] that are not offered within the Nevada plan [which only seems to offer bonds funds with a risk potential of at least 2].
While recent performance may likely be an anomaly, the intermediate terms bond funds available in the Vanguard/Nevada plan were in the red while the short term ones offered by Utah were just slightly down or stayed above water last I checked. Of course you can do intermediate term at Utah too or you can do an even lower risk money market type thing at either Nevada or Utah.
I talked to the Vanguard 529 people about it and they were like "yeah good point, but Nevada has a big say in the plan and it is not all up to us".
So while personally I am in the Vanguard 529 plan, I think it should include some lower risk bond funds which offer a little higher rate of return than a money market (or
Interest Accumulation Portfolio as Vanguard's 529 calls it).
In that regard, Utah has a better selection of shorter term bond funds.
The bond funds offered by the Vanguard/Nevada plan are all intermediate term (see https://personal.vanguard.com/us/funds/ ... ios/bytype). Utah offers a couple of short term ones: (1) Vanguard Short-Term Investment-Grade Fund (VFSIX) and (2) Vanguard Short-Term Bond Index Fund (VBIPX) [both of which have a Risk potential of 1] that are not offered within the Nevada plan [which only seems to offer bonds funds with a risk potential of at least 2].
While recent performance may likely be an anomaly, the intermediate terms bond funds available in the Vanguard/Nevada plan were in the red while the short term ones offered by Utah were just slightly down or stayed above water last I checked. Of course you can do intermediate term at Utah too or you can do an even lower risk money market type thing at either Nevada or Utah.
I talked to the Vanguard 529 people about it and they were like "yeah good point, but Nevada has a big say in the plan and it is not all up to us".
So while personally I am in the Vanguard 529 plan, I think it should include some lower risk bond funds which offer a little higher rate of return than a money market (or
Interest Accumulation Portfolio as Vanguard's 529 calls it).
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Re: Why Utah 529 instead of Vanguard 529?
One other point about the Utah plan - they offer FDIC insured options, so as you get closer to college, you can either transfer or allocate more to an FDIC insured savings account, thus protecting your principal from fluctuation with insurance protection.
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- White Coat Investor
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Re: Why Utah 529 instead of Vanguard 529?
The Utah 529 has one more advantage that hasn't been mentioned....a 5% credit on your state taxes. Always be sure to check out your own state's 529 before choosing a Utah, NY, or NV plan.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Re: Why Utah 529 instead of Vanguard 529?
Thanks for the feedback everyone.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
- Go Blue 99
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Re: Why Utah 529 instead of Vanguard 529?
Is there a way to determine the % of International in the Vanguard/Nevada 529 portfolios?
I downloaded the guide and it doesn't seem to offer this detail. For example, for the Aggressive Growth Portfolio, it only says:
Through its investment in Vanguard Institutional Total Stock Market Index Fund, the Portfolio indirectly invests in
primarily large-capitalization U.S. stocks, and to a lesser extent in mid-, small-, and micro-capitalization U.S. stocks.
The Fund’s target index represents approximately 100% of the investable U.S. stock market. Through its investment
in Vanguard Total International Stock Index Fund, the Portfolio indirectly invests in international stocks.
I downloaded the guide and it doesn't seem to offer this detail. For example, for the Aggressive Growth Portfolio, it only says:
Through its investment in Vanguard Institutional Total Stock Market Index Fund, the Portfolio indirectly invests in
primarily large-capitalization U.S. stocks, and to a lesser extent in mid-, small-, and micro-capitalization U.S. stocks.
The Fund’s target index represents approximately 100% of the investable U.S. stock market. Through its investment
in Vanguard Total International Stock Index Fund, the Portfolio indirectly invests in international stocks.
- archbish99
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Re: Why Utah 529 instead of Vanguard 529?
...for Utah residents, that is.EmergDoc wrote:The Utah 529 has one more advantage that hasn't been mentioned....a 5% credit on your state taxes. Always be sure to check out your own state's 529 before choosing a Utah, NY, or NV plan.
Those of us in states without income tax have little incentive to prioritize our own state's 529 plans.
I'm not a financial advisor, I just play one on the Internet.
- White Coat Investor
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Re: Why Utah 529 instead of Vanguard 529?
If you're in a state without income tax, your first $2K probably ought to go into an ESA. Then, if you move to a state with an income tax and a 529 deduction, you can move the ESA money to the 529 and get a windfall deduction.
A while back it was looking like ESA contribution limits were going to fall to $500 and I think Vanguard quit letting you open new ones as I recall. Not sure exactly where Vanguard is at with that these days.
A while back it was looking like ESA contribution limits were going to fall to $500 and I think Vanguard quit letting you open new ones as I recall. Not sure exactly where Vanguard is at with that these days.
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4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
- danwhite77
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Re: Why Utah 529 instead of Vanguard 529?
I use the Vanguard (Nevada) plan. As someone else mentioned, 529s are constantly changing, mostly in positive ways. Utah used to have the lowest expense ratios by far while Nevada had somewhat higher ratios, particularly in the age-based options. That was not Vanguard's fault. The way these plans work is that the investment company (e.g., Vanguard) runs the underlying fund with a certain expense ratio. The state then layers on another expense ratio of their own for administrative costs. These two expense ratios layered on together (in addition to any maintenance fees, I think Utah charges a very minimal quarterly flat maintenance fee as well) results in the total expense ratio.
Utah has generally had the lowest fund expenses and administrative expenses for about a decade. Nevada used to be higher due to the higher administrative expense but now that expense has come down significantly. Last time I checked it was basically a wash between Utah and Nevada expenses. I initially selected Nevada because as Vanguard's 529, they had the largest selection of Vanguard funds. That, too, may have changed. I recommend Utah to my friends that aren't interested in the entire array of Vanguard funds (assuming their own in-state plan does not offer a tax break or is poorly run). If you are interested in assembling your own portfolio of Vanguard funds, my experience with Nevada has been great.
Utah has generally had the lowest fund expenses and administrative expenses for about a decade. Nevada used to be higher due to the higher administrative expense but now that expense has come down significantly. Last time I checked it was basically a wash between Utah and Nevada expenses. I initially selected Nevada because as Vanguard's 529, they had the largest selection of Vanguard funds. That, too, may have changed. I recommend Utah to my friends that aren't interested in the entire array of Vanguard funds (assuming their own in-state plan does not offer a tax break or is poorly run). If you are interested in assembling your own portfolio of Vanguard funds, my experience with Nevada has been great.
"While some mutual fund founders chose to make billions, he chose to make a difference." - Dedication to Jack Bogle in 'The Bogleheads' Guide to Investing'.
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Re: Why Utah 529 instead of Vanguard 529?
Ok - question. Given:
State Tax Rate: 4.25% (assume resident & deductible)
Annual Contributions: $1-10k
Average In-State 529 Investment ERs: ~0.25% (TIAA-CREF)
Looking at the Utah 529 site, the ER for their investment options are a little cheaper. 0.160% to 0.224%
Nevada 529 appears to be about the same as the TIAA-CREF with ERs of 0.21% or higher.
Where's the decision/tipping point between the 1-time, up front 4.25% deduction ($425 @ 10k/yr) vs. the ~0.05% ER discount over 18 years with an account balance growing from $0 - $xx,xxx over that time? Seems like you would need a fairly large contribution rate for the 18 years to offset the up-front, 1time deduction. No?
State Tax Rate: 4.25% (assume resident & deductible)
Annual Contributions: $1-10k
Average In-State 529 Investment ERs: ~0.25% (TIAA-CREF)
Looking at the Utah 529 site, the ER for their investment options are a little cheaper. 0.160% to 0.224%
Nevada 529 appears to be about the same as the TIAA-CREF with ERs of 0.21% or higher.
Where's the decision/tipping point between the 1-time, up front 4.25% deduction ($425 @ 10k/yr) vs. the ~0.05% ER discount over 18 years with an account balance growing from $0 - $xx,xxx over that time? Seems like you would need a fairly large contribution rate for the 18 years to offset the up-front, 1time deduction. No?
- White Coat Investor
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Re: Why Utah 529 instead of Vanguard 529?
I agree. Get your deduction.
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4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
- White Coat Investor
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Re: Why Utah 529 instead of Vanguard 529?
I actually think NY is the cheapest these days, but we've gotten to the point where we're talking about less than 5 basis points now, which probably doesn't matter.danwhite77 wrote:I use the Vanguard (Nevada) plan. As someone else mentioned, 529s are constantly changing, mostly in positive ways. Utah used to have the lowest expense ratios by far while Nevada had somewhat higher ratios, particularly in the age-based options. That was not Vanguard's fault. The way these plans work is that the investment company (e.g., Vanguard) runs the underlying fund with a certain expense ratio. The state then layers on another expense ratio of their own for administrative costs. These two expense ratios layered on together (in addition to any maintenance fees, I think Utah charges a very minimal quarterly flat maintenance fee as well) results in the total expense ratio.
Utah has generally had the lowest fund expenses and administrative expenses for about a decade. Nevada used to be higher due to the higher administrative expense but now that expense has come down significantly. Last time I checked it was basically a wash between Utah and Nevada expenses. I initially selected Nevada because as Vanguard's 529, they had the largest selection of Vanguard funds. That, too, may have changed. I recommend Utah to my friends that aren't interested in the entire array of Vanguard funds (assuming their own in-state plan does not offer a tax break or is poorly run). If you are interested in assembling your own portfolio of Vanguard funds, my experience with Nevada has been great.
One thing I find highly annoying with Utah's plan is that they pay the expenses by selling off shares, so your # of shares is constantly changing and it makes updating spreadsheets a pain.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Re: Why Utah 529 instead of Vanguard 529?
I have the ny529 plan and just put it into moderate growth - I didn't know I had different fund choices other then aggressive /moderate or conservative - am I missing something should I look into something else in the ny529?
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Re: Why Utah 529 instead of Vanguard 529?
Why are you tracking shares by spreadsheet? Just download the quarterly statements, file them away, be done with it.EmergDoc wrote:I actually think NY is the cheapest these days, but we've gotten to the point where we're talking about less than 5 basis points now, which probably doesn't matter.danwhite77 wrote:I use the Vanguard (Nevada) plan. As someone else mentioned, 529s are constantly changing, mostly in positive ways. Utah used to have the lowest expense ratios by far while Nevada had somewhat higher ratios, particularly in the age-based options. That was not Vanguard's fault. The way these plans work is that the investment company (e.g., Vanguard) runs the underlying fund with a certain expense ratio. The state then layers on another expense ratio of their own for administrative costs. These two expense ratios layered on together (in addition to any maintenance fees, I think Utah charges a very minimal quarterly flat maintenance fee as well) results in the total expense ratio.
Utah has generally had the lowest fund expenses and administrative expenses for about a decade. Nevada used to be higher due to the higher administrative expense but now that expense has come down significantly. Last time I checked it was basically a wash between Utah and Nevada expenses. I initially selected Nevada because as Vanguard's 529, they had the largest selection of Vanguard funds. That, too, may have changed. I recommend Utah to my friends that aren't interested in the entire array of Vanguard funds (assuming their own in-state plan does not offer a tax break or is poorly run). If you are interested in assembling your own portfolio of Vanguard funds, my experience with Nevada has been great.
One thing I find highly annoying with Utah's plan is that they pay the expenses by selling off shares, so your # of shares is constantly changing and it makes updating spreadsheets a pain.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Why Utah 529 instead of Vanguard 529?
UT plan was the king.
NY plan is the new king.
There is no "Vanguard plan", only the NV plan run by Vanguard. It is a good plan but NY is better.
If you don't get an in state deduction, or if your state allows the deduction no matter which state plan you choose (PA does), go with NY.
Otherwise crunch the numbers - or if your state does not do a clawback, fund the in state plan, get the deduction, then transfer to NY plan.
NY plan is the new king.
There is no "Vanguard plan", only the NV plan run by Vanguard. It is a good plan but NY is better.
If you don't get an in state deduction, or if your state allows the deduction no matter which state plan you choose (PA does), go with NY.
Otherwise crunch the numbers - or if your state does not do a clawback, fund the in state plan, get the deduction, then transfer to NY plan.
Last edited by dickenjb on Wed Apr 23, 2014 5:58 pm, edited 1 time in total.
Re: Why Utah 529 instead of Vanguard 529?
I have my kids in age based -- should I change it to individual plans
Any recommendations
Son 1 - 14
Son 2 - 12
Thanks
Any recommendations
Son 1 - 14
Son 2 - 12
Thanks
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Re: Why Utah 529 instead of Vanguard 529?
https://personal.vanguard.com/us/FundsS ... IntExt=INT
It is 70/30
It is 70/30
Go Blue 99 wrote:Is there a way to determine the % of International in the Vanguard/Nevada 529 portfolios?
I downloaded the guide and it doesn't seem to offer this detail. For example, for the Aggressive Growth Portfolio, it only says:
Through its investment in Vanguard Institutional Total Stock Market Index Fund, the Portfolio indirectly invests in
primarily large-capitalization U.S. stocks, and to a lesser extent in mid-, small-, and micro-capitalization U.S. stocks.
The Fund’s target index represents approximately 100% of the investable U.S. stock market. Through its investment
in Vanguard Total International Stock Index Fund, the Portfolio indirectly invests in international stocks.
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Re: Why Utah 529 instead of Vanguard 529?
Just use the Aggresive Growth Portfolio https://personal.vanguard.com/us/FundsS ... IntExt=INT and change your TSM allocation accordingly. The ER will be much lower that way.
mikep wrote:Also, total international stock index costs 0.55% from Vanguard directly. That is the main reason I did not sign up with Vanguard.
Re: Why Utah 529 instead of Vanguard 529?
I have both the vanguard Nevada 529 as well as Utah possibly for over ten years, definitely 5.
Utah over time seems better, they constantly drop ERs, fees, etc over years. even for out of staters. It has a very good feel to it. It feels almost conscientious. Which is something I don't feel about any other investment.
Having said that, I likely have used Nevadas about equally. One us in wifes name, one in my name. If I had to pick only one, it would be Utah.
Over the years, some states pop up and are better, then fall off... Utah is always in the top 5 or so. It's just been real consistent.
Utah over time seems better, they constantly drop ERs, fees, etc over years. even for out of staters. It has a very good feel to it. It feels almost conscientious. Which is something I don't feel about any other investment.
Having said that, I likely have used Nevadas about equally. One us in wifes name, one in my name. If I had to pick only one, it would be Utah.
Over the years, some states pop up and are better, then fall off... Utah is always in the top 5 or so. It's just been real consistent.
Re: Why Utah 529 instead of Vanguard 529?
Another potential aspect for the folks trying to tax shelter - different plans have different top caps of how much money can be put into the plan before they close off new contributions and what max contributions you can make per year - they are not all equal
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.