Which 529K

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
abhinav23
Posts: 13
Joined: Tue May 23, 2017 12:01 am
Location: Cleveland, OH

Which 529K

Post by abhinav23 »

Hello Bogleheads,

I needed a specific advise about 529k. I am about to open a 529 plan for my two year old daughter. I am currently in Ohio but may move to another state (no idea where) versus continue to stay in Ohio mid-2019. If I chose the Ohio plan, I could get some tax deductions now and then possibly have to pay the state back if I moved out of state. If I buy the Ohio 529k and then moved, would it be then better to choose a NY, NV or UT 529 plan anyway and pay up the tax deductible back to the Ohio state or should I continue holding onto the Ohio plan even then? Are the above plans incredibly better than the Ohio plan so that it is better to forego the tax deduction received from Ohio and change to those plans when moving?

AS
Brain
Posts: 134
Joined: Fri May 27, 2016 9:14 am

Re: Which 529K

Post by Brain »

Why would you need to repay Ohio? If you were legitimately a state resident when you made the contribution, why wouldn't you be entitled to it due to moving later? Do you have specific guidance from the state tax authority regarding this?

The state tax deduction is far more significant than the fund-selection issue, unless you're dealing with an order of magnitude more money than most folks can manage to squirrel away. Unless your new state doesn't offer the deduction, I would recommend staying in-state. If they don't, then you can always transfer the money from the Ohio account to whichever Vanguard-sponsored plan is most beneficial.
rkhusky
Posts: 17654
Joined: Thu Aug 18, 2011 8:09 pm

Re: Which 529K

Post by rkhusky »

Most, but not all, states have a clawback provision that requires repayment of the tax deduction if funds are transferred. You don't have to move the funds from the existing plan just because you move out of state. If you are happy with the plan (has good choices and low expenses), I wouldn't move it unless I could get back the tax deduction from the state I was moving the funds to.
Post Reply