529 Plan Help- best money market/savings account options

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grok87
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Joined: Tue Feb 27, 2007 9:00 pm

529 Plan Help- best money market/savings account options

Post by grok87 » Fri Nov 29, 2013 12:28 pm

Hello Bogleheads,
So i could use some help finding 529 plans with the best money market/savings account options.
I haven't been that impressed that far with what i've seen out there, especially with the disclosure. Here are a couple of things i'm struggling with:

1) Vanguard 529 plan. This has an interest accumulation portfolio that is 100% invested in the Vanguard Short term reserves account.
https://personal.vanguard.com/us/funds/ ... IntExt=INT
that says it can invest in insurance company funding agreement which are not fdic insured. so yuck!
i can't find any of the holdings to see how big an issue it is in practice. anybody have a link?

2) Fidelity Unique 529 plan bank deposit account
this says it invests in various bank deposits. there is fdic insurance but it warns that it is subject to $250 k limit (or higher for joint?) and that you have to monitor your other personal deposits in case they overlap
http://www.nh.gov/treasury/Divisions/DM ... Report.pdf
the annual report is no help- doesn't list the banks. anyone have any info or a link?

3) what other plans have more disclosure better rates? utah, ohio, va?

thanks
cheers,
Last edited by grok87 on Fri Nov 29, 2013 2:58 pm, edited 1 time in total.
Keep calm and Boglehead on. KCBO.

Brit
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Re: 529 Plan Help- best money market/savings account options

Post by Brit » Fri Nov 29, 2013 1:10 pm

I'd suggest looking into I Bonds. Great for education saving, and inflation protected. I had awful results from a 529 plan and glad I switched.

Grt2bOutdoors
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Location: New York

Re: 529 Plan Help- best money market/savings account options

Post by Grt2bOutdoors » Fri Nov 29, 2013 1:13 pm

If principal protection is of paramount importance - the Utah plan offers an FDIC insured option through Zions National Bank, the Ohio plan uses Fifth Third - both savings and CD options. Or as the other OP suggested, use Series I bonds as your back-up plan.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

inbox788
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Re: 529 Plan Help- best money market/savings account options

Post by inbox788 » Fri Nov 29, 2013 1:40 pm

These days, I wonder whether it's worth the trouble putting new cash with cash/money market/bonds in 529 plan. I don't mean existing cash that needs to be spent on education or benefiting from state tax deduction for those few states that it's a bonus. Keep doing that. Also, if you have more than 5-10 years, then AA and re-balancing investments plays a part.

But in the shorter term, with expected returns in the 2-4% range in the next 5 years, every $10,000 in bonds, yields around $300, so $1500 in gains that's avoiding taxes. Long term capital gains benefit around $300 and if short term or income, might be around $500. If the cash isn't locked already locked in a tax beneficial account, I'd seriously consider other alternatives.

sanfran
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Re: 529 Plan Help- best money market/savings account options

Post by sanfran » Fri Nov 29, 2013 2:34 pm

grok87, here are two 529 alternatives for your consideration:

Virginia CollegeWealth
FDIC-insured savings accounts
2.00-2.25% with BB&T
2.00-2.30% with Union First Market Bank
http://virginia529.com/collegewealth/index.php

Colorado CollegeInvest
3.04% with MetLife's Stable Value Plus option (edit: sounds like this might not meet your needs)
https://www.collegeinvest.org/our-savin ... value-plus

I recently posted about my experience with the Virginia CollegeWealth program in this thread:
http://www.bogleheads.org/forum/viewtop ... 3#p1861153

grok87
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Re: 529 Plan Help- best money market/savings account options

Post by grok87 » Fri Nov 29, 2013 3:37 pm

Brit wrote:I'd suggest looking into I Bonds. Great for education saving, and inflation protected. I had awful results from a 529 plan and glad I switched.
thanks but already buying as much Ibonds as i can.
Keep calm and Boglehead on. KCBO.

grok87
Posts: 8504
Joined: Tue Feb 27, 2007 9:00 pm

Re: 529 Plan Help- best money market/savings account options

Post by grok87 » Fri Nov 29, 2013 3:38 pm

Grt2bOutdoors wrote:If principal protection is of paramount importance - the Utah plan offers an FDIC insured option through Zions National Bank, the Ohio plan uses Fifth Third - both savings and CD options. Or as the other OP suggested, use Series I bonds as your back-up plan.
thanks. I will consider both of those.
Keep calm and Boglehead on. KCBO.

grok87
Posts: 8504
Joined: Tue Feb 27, 2007 9:00 pm

Re: 529 Plan Help- best money market/savings account options

Post by grok87 » Fri Nov 29, 2013 3:42 pm

inbox788 wrote:These days, I wonder whether it's worth the trouble putting new cash with cash/money market/bonds in 529 plan. I don't mean existing cash that needs to be spent on education or benefiting from state tax deduction for those few states that it's a bonus. Keep doing that. Also, if you have more than 5-10 years, then AA and re-balancing investments plays a part.

But in the shorter term, with expected returns in the 2-4% range in the next 5 years, every $10,000 in bonds, yields around $300, so $1500 in gains that's avoiding taxes. Long term capital gains benefit around $300 and if short term or income, might be around $500. If the cash isn't locked already locked in a tax beneficial account, I'd seriously consider other alternatives.
thanks. Its a good point. Are there other benefits beyond the tax benefits. I guess i'm thinking of how assets factor into financial aid applications, etc.
Keep calm and Boglehead on. KCBO.

grok87
Posts: 8504
Joined: Tue Feb 27, 2007 9:00 pm

Re: 529 Plan Help- best money market/savings account options

Post by grok87 » Fri Nov 29, 2013 3:43 pm

sanfran wrote:grok87, here are two 529 alternatives for your consideration:

Virginia CollegeWealth
FDIC-insured savings accounts
2.00-2.25% with BB&T
2.00-2.30% with Union First Market Bank
http://virginia529.com/collegewealth/index.php

Colorado CollegeInvest
3.04% with MetLife's Stable Value Plus option (edit: sounds like this might not meet your needs)
https://www.collegeinvest.org/our-savin ... value-plus

I recently posted about my experience with the Virginia CollegeWealth program in this thread:
http://www.bogleheads.org/forum/viewtop ... 3#p1861153
thanks- agree Colorado is probably not a great fit for me.
Keep calm and Boglehead on. KCBO.

Ed 2
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Re: 529 Plan Help- best money market/savings account options

Post by Ed 2 » Fri Nov 29, 2013 3:47 pm

Brit wrote:I'd suggest looking into I Bonds. Great for education saving, and inflation protected. I had awful results from a 529 plan and glad I switched.
It is maybe good step on your part if you started investing into 529 when stocks were high let say in late 90's and yearly 2000's, but it is not necessary would be a bad idea for those who started investing in 2008 and having good results since. I love my 529's!
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel

grok87
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Joined: Tue Feb 27, 2007 9:00 pm

Re: 529 Plan Help- best money market/savings account options

Post by grok87 » Sat Nov 30, 2013 8:46 am

Ed 2 wrote:
Brit wrote:I'd suggest looking into I Bonds. Great for education saving, and inflation protected. I had awful results from a 529 plan and glad I switched.
It is maybe good step on your part if you started investing into 529 when stocks were high let say in late 90's and yearly 2000's, but it is not necessary would be a bad idea for those who started investing in 2008 and having good results since. I love my 529's!
i like fixed income in 529s now for me more than stocks as the college bills are getting closer.
Keep calm and Boglehead on. KCBO.

3flash
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Joined: Wed May 01, 2013 8:25 pm

Re: 529 Plan Help- best money market/savings account options

Post by 3flash » Mon Nov 10, 2014 6:31 pm

This post is from last year looking for similar information.

http://www.bogleheads.org/forum/viewtop ... 1&t=127339

The Colorado Stable Value Plus plan claims for 2014 a guaranteed annual rate of return of 2.64% net of fees.

https://www.collegeinvest.org/our-savin ... value-plus


For what it's worth, I moved the fixed income portion of my 529 savings into this fund after reading the thread above and also reading a similar article on The Finance Buff, who I believe posts here regularly.

grok87
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Re: 529 Plan Help- best money market/savings account options

Post by grok87 » Mon Nov 10, 2014 7:55 pm

3flash wrote:This post is from last year looking for similar information.

http://www.bogleheads.org/forum/viewtop ... 1&t=127339

The Colorado Stable Value Plus plan claims for 2014 a guaranteed annual rate of return of 2.64% net of fees.

https://www.collegeinvest.org/our-savin ... value-plus


For what it's worth, I moved the fixed income portion of my 529 savings into this fund after reading the thread above and also reading a similar article on The Finance Buff, who I believe posts here regularly.
thanks
Keep calm and Boglehead on. KCBO.

trueblueky
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Re: 529 Plan Help- best money market/savings account options

Post by trueblueky » Mon Nov 10, 2014 8:23 pm

grok87 wrote:Are there other benefits beyond the tax benefits. I guess i'm thinking of how assets factor into financial aid applications, etc.
529 counts as the parents' asset, not the student's, so that's good for FAFSA.

overvue
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Joined: Tue Sep 24, 2013 1:28 pm

Re: 529 Plan Help- best money market/savings account options

Post by overvue » Tue Nov 11, 2014 3:07 pm

Good points on all posts. Regarding assets: whether it is in a 529 plan or in taxable account or savings account in the parents name, it is considered as parent assets and get dinged by 5.64%. A 529 in a students name also gets the same treatment for FAFSA...like a parent asset. But not any other asset in a students name.

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