What 529 plan are you using?

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james865
Posts: 58
Joined: Sat Feb 11, 2017 10:32 am

What 529 plan are you using?

Post by james865 »

I've had my 2nd child and will be contributing an additional 10-14k this year.

I've exhausted my state tax benefit on my in-state plan. So, I've been looking for a good plan outside of my state.

I primarily ask this question of bogleheads that are NOT using your in-state plan. In most cases it's best to use your in-state plan if you save on taxes, but since I'm past that threshold I have other options.

Several sites seem to be helpful in making this decision:
http://beta.morningstar.com/articles/83 ... -2017.html
http://www.savingforcollege.com/529_fee ... lowest.php
....Boglehead wiki on 529s.
....(and yes, I've check the first 6 pages of the search feature for "529")

From my research, a plan from UT, IL, NY, or NV are top contenders, although there may be others.

Why did you pick your 529 plan?
- fees
- glide path
- investment options
- convenience (link to Vanguard, etc.)

Second, what investment option did you choose?
- conservative, moderate, aggressive, fixed, self-directed, other?

Please refrain from posting 529 plans that you only invest in because you receive a state tax deduction, unless of course you believe your state's plan is the best option for someone even without a tax deduction.
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beyou
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Re: What 529 plan are you using?

Post by beyou »

I live in NY and have indeed invested more than the state deductible amount.
And I have just now gone though the lifecycle, from investing, to spending down and closing account
during college when funds were exhausted.

Very good plan that uses vanguard as the investment advisor.
Good online customer service.
Never had to call them for anything since all went smoothly with their service.
Fees have declined over the years, NYS has managed to make sure it's cost competitive.
homeslice
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Re: What 529 plan are you using?

Post by homeslice »

I use the UT one. Didn't do a ton of research. Saw that folks on this site and from Clark Howard use it. Thought that it would be reasonable enough. I live in WA state. From some searching on this site, most agreed that the 529 plan in WA was not very good option so I went with UT. Vanguard options which was important to me. Only complaint is that as the accounts grow, so do the fees.
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Chan_va
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Re: What 529 plan are you using?

Post by Chan_va »

I used to live in VA and have moved out. But still use the VA plan. They have good low cost Vanguard funds. But their age based portfolio’s seem overly complex. I just use the index funds and plan to adjust the glide path myself.
ENT Doc
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Re: What 529 plan are you using?

Post by ENT Doc »

This depends on your asset allocation and how you want things managed. If you're looking for a basic three fund portfolio and a self-directed glide path I found CA hard to beat on a recent search I did for my second child. Check them out - certainly more of a non-traditional recommendation (NY, UT, NV) but I think it beats those others on expense ratios if you're looking for what I was after.
RetiredCSProf
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Re: What 529 plan are you using?

Post by RetiredCSProf »

I am using the Vanguard aggressive age-based 529 plan. I am a resident of California, which provides no in-state plans. I've been happy with the Vanguard plan, and, a few months ago, they made some adjustments that improved the age-based ladders.

I invested $55K (gift from Gramma) for my only child some time around 2006. The fund dipped below the purchase price for a short time in 2008, but quickly recovered and continued to rise. By the time my son turned 18, the investment had grown to about $100K, which mirrored tuition inflation (which is similar to the inflation rate of the cost of purchasing a new car).

When my son turned 19, hIs Vanguard fund flat-lined, after being converted to 100% bonds. With the revision in the age-based plan earlier this year, it is now 10% stocks and 90% bonds, so at least is keeping up with cost-of-living adjustment, if not tuition inflation.

We have not yet withdrawn from his 529 plan. My son opted to attend community college for three years before transferring to a 4-year college. We are using his Coverdell Education Plan for community college fees, an option that I think is being discontinued. The Coverdell fund is invested in 100% equities in Janus Henderson.

I don't know what will happen with Coverdell funds in 2018. Not sure if I will need to use it up or convert balance to a 529 plan.
Broken Man 1999
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Re: What 529 plan are you using?

Post by Broken Man 1999 »

We are using the Vanguard 529 College Savings Plan (Nevada) for three of our four grandchildren. Our fourth grandchild has a 529 plan thru the State of Florida; his 529 plan will be moved to Vanguard as soon as it hits the minimum to open a plan at Vanguard ($3000).

1. Florida has no income tax, so there is no incentive to use the state plan, though it actually isn't too bad.
2. All our investments are held at Vanguard, so it was a no-brainer for us to select the Vanguard 529 plan. I love being able to see everything financial in total, instead of signing in to multiple websites.
3. Fees are reasonable, better than our state plan. No surprise there, it's Vanguard!
4. All our grandchildren's 529 plans are invested aggressively. Their State of Florida University System tuition plans are paid, so the 529 plans are for incidentals, a not necessarily small expense. Some of the other grandparents are also funding 529 plans. At some point we probably should talk to each other, I suppose. However, this activity is very personal, to all of us. I know the other sets of grandparents share our value of education, as their children are all college educated.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
limeyx
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Re: What 529 plan are you using?

Post by limeyx »

homeslice wrote: Sat Dec 16, 2017 1:08 pm I use the UT one. Didn't do a ton of research. Saw that folks on this site and from Clark Howard use it. Thought that it would be reasonable enough. I live in WA state. From some searching on this site, most agreed that the 529 plan in WA was not very good option so I went with UT. Vanguard options which was important to me. Only complaint is that as the accounts grow, so do the fees.
Yup same here pretty much
doneat53
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Re: What 529 plan are you using?

Post by doneat53 »

We are using the Vanguard 529 College Savings Plan (Nevada) for three of our four grandchildren. Our fourth grandchild has a 529 plan thru the State of Florida; his 529 plan will be moved to Vanguard as soon as it hits the minimum to open a plan at Vanguard ($3000).

1. Florida has no income tax, so there is no incentive to use the state plan, though it actually isn't too bad.
2. All our investments are held at Vanguard, so it was a no-brainer for us to select the Vanguard 529 plan. I love being able to see everything financial in total, instead of signing in to multiple websites.
3. Fees are reasonable, better than our state plan. No surprise there, it's Vanguard!
4. All our grandchildren's 529 plans are invested aggressively. Their State of Florida University System tuition plans are paid, so the 529 plans are for incidentals, a not necessarily small expense. Some of the other grandparents are also funding 529 plans. At some point we probably should talk to each other, I suppose. However, this activity is very personal, to all of us. I know the other sets of grandparents share our value of education, as their children are all college educated.

Broken Man 1999
Like Broken Man we are using the Nevada Vanguard 529 College Savings Plan. Living in WA state with no income tax puts us in essentially the same situation.

WA has a plan where you can buy guaranteed tuition at the state's most expensive public institution today and it will maintain value. But if you want to use it elsewhere you can withdraw for the equivalent cash value. Problem is after we bought into this program the state started REDUCING the price of college at UW (the most expensive public institution) so people started losing value in the plan. At that point I pulled our funds and went with an out of state plan.

If your state has state income tax sometimes there are state tax benefits to these plans if you invest in your state's plan so I would check into that first, then do the math to see if another state's plan is better or worse for your situation.

If your kids are anywhere close to starting college I highly recommend modeling their tuition room and board expenses so you don't overfund the account.
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The529guy
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Re: What 529 plan are you using?

Post by The529guy »

Vanguard 529 (NV)

No state benefit. Started with NY’s plan, but consolidated at Vanguard for one less login.
workerbeeengineer
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Re: What 529 plan are you using?

Post by workerbeeengineer »

Our state has no tax benefit for 529 plans so went with Vanguard Nevada plan. Very satisfied.
tx_hombre
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Re: What 529 plan are you using?

Post by tx_hombre »

In Texas. We use Utah with all three kiddos.
3funder
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Re: What 529 plan are you using?

Post by 3funder »

Vanguard (NV) College Savings Plan; moderate age-based option. My wife and I aren't interested in letting the tax tail wag the entire dog, as our in-state plan, despite the front-end tax benefits, offers mostly active funds with higher expense ratios than my wife and I prefer. There is the potential for the higher expense ratios associated with funds offered as part of our in-state plan to eat away at the front-end tax benefits once there is a sufficiently hefty amount of money invested. We also welcome the opportunity to view the majority of our investments simply by logging on to our Vanguard account(s).
Last edited by 3funder on Sun Dec 17, 2017 3:02 pm, edited 4 times in total.
Global stocks, US bonds, and time.
kaneohe
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Re: What 529 plan are you using?

Post by kaneohe »

RetiredCSProf wrote: Sat Dec 16, 2017 1:37 pm ..................................... I am a resident of California, which provides no in-state plans.........................
https://www.savingforcollege.com/529-plans/california

or perhaps you meant no state tax deduction?
Topic Author
james865
Posts: 58
Joined: Sat Feb 11, 2017 10:32 am

Re: What 529 plan are you using?

Post by james865 »

I'm leaning towards the Nevada Vanguard fund, age-based, aggressive.

I've compared the glide paths between this and the Utah plan closely. To me, Nevada seems slightly more aggressive (especially more aggressive on the international side). It's slightly less expensive, and will be accessible from my Vanguard account.
3funder wrote: Sun Dec 17, 2017 2:40 pm Vanguard (NV) College Savings Plan; moderate age-based option. My wife and I aren't interested in letting the tax tail wag the entire dog, as our in-state plan, despite the front-end tax benefits, offers mostly active funds with higher expense ratios than my wife and I prefer. There is the potential for the higher expense ratios associated with funds offered as part of our in-state plan to eat away at the front-end tax benefits once there is a sufficiently hefty amount of money invested. We also welcome the opportunity to view the majority of our investments simply by logging on to our Vanguard account(s).
I save approximately $700 in state income taxes using my state's fund. Just to walk back my previous statement about contributing to your state fund first:

Reading through the prospectuses, the 10 year cost on my state's plan is ~$650 and the NV plan is ~$200 range ($450 difference). Over the course of 15-20 years this is obviously more and will likely completely negate the savings in state taxes; especially for funds that are deposited which my kids are <10 years old. Is my thinking correct on this topic?
amitb00
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Re: What 529 plan are you using?

Post by amitb00 »

T Rowe Price age based and Vanguard Total Stock Market funds
jcf
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Re: What 529 plan are you using?

Post by jcf »

Using NY, UT, NV and Wealthfront 529 Robo plans. For me, these are the top plans. Keeping WF to 15K which is free to manage. Good low fee choices in other plans. Mostly keep around 70/30 domestic/International in plans, except Robo which chooses investments based on risk factor.
GuyInFL
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Re: What 529 plan are you using?

Post by GuyInFL »

homeslice wrote:
Sat Dec 16, 2017 2:08 pm
I use the UT one. Didn't do a ton of research. Saw that folks on this site and from Clark Howard use it. Thought that it would be reasonable enough. I live in WA state. From some searching on this site, most agreed that the 529 plan in WA was not very good option so I went with UT. Vanguard options which was important to me. Only complaint is that as the accounts grow, so do the fees.

Yup same here pretty much
Me too.

http://clark.com/education/clarks-529-plan-guide/
MarvinK
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Location: DC

Re: What 529 plan are you using?

Post by MarvinK »

California
Index US Equity 8 basis points
Index Bonds 15 basis points
Index Int'l 12 basis points
I rebalance myself. It's TIAA-CREF. I've been happy with the initial sign up and website, etc. going on 3 years now.

New York
Age-based
For a close friend where the in-state program was undesirable

I also have done a lot of research on many states plans for relatives, other bogleheads, et al. I always look at the in-state plan first.
Also for some people, the initial sign up amount and the recurring minimum make a difference (not to you, but for some). CA was $15, some are $25. My recommendation (and I do this myself) is a payroll deduction because most people don't have a big lump sum. With a payroll deduction most people will not miss $15-$50, then they can increase it.

In summary I pick/recommend plans (out of state) for:
-Fees
-Minimum recurring amount
-Larger states and amount of participants will drive down fees (FL and TX are the exception)
-Will the person rebalance or be better with an age-based investment
Outafter20
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Re: What 529 plan are you using?

Post by Outafter20 »

New York 529 Plan.

Just moved the assets from 100% equity to Moderate Growth Portfolio (50/50).

Daughter is 13 years old.
3funder
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Re: What 529 plan are you using?

Post by 3funder »

james865 wrote: Sun Dec 17, 2017 3:26 pm I'm leaning towards the Nevada Vanguard fund, age-based, aggressive.

I've compared the glide paths between this and the Utah plan closely. To me, Nevada seems slightly more aggressive (especially more aggressive on the international side). It's slightly less expensive, and will be accessible from my Vanguard account.
3funder wrote: Sun Dec 17, 2017 2:40 pm Vanguard (NV) College Savings Plan; moderate age-based option. My wife and I aren't interested in letting the tax tail wag the entire dog, as our in-state plan, despite the front-end tax benefits, offers mostly active funds with higher expense ratios than my wife and I prefer. There is the potential for the higher expense ratios associated with funds offered as part of our in-state plan to eat away at the front-end tax benefits once there is a sufficiently hefty amount of money invested. We also welcome the opportunity to view the majority of our investments simply by logging on to our Vanguard account(s).
I save approximately $700 in state income taxes using my state's fund. Just to walk back my previous statement about contributing to your state fund first:

Reading through the prospectuses, the 10 year cost on my state's plan is ~$650 and the NV plan is ~$200 range ($450 difference). Over the course of 15-20 years this is obviously more and will likely completely negate the savings in state taxes; especially for funds that are deposited which my kids are <10 years old. Is my thinking correct on this topic?
Your thinking is probably correct. In which state do you reside?
Global stocks, US bonds, and time.
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