Best 529 plan for California, for self

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billthecat
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Best 529 plan for California, for self

Post by billthecat » Thu Aug 09, 2018 11:29 am

For a Californian who wants a 529 plan for himself, to cover some education costs in retirement to keep the mind active, what would be the best 529 plan? There are no tax benefits in California so everything can be considered. The California plan itself doesn't seem too bad - for an individual index fund of all US equity, the plan ER is .03% and the fund ER is .05%, for a total of .08%. Is there a better option?

mervinj7
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Re: Best 529 plan for California, for self

Post by mervinj7 » Thu Aug 09, 2018 12:25 pm

That's an excellent option for CA residents. Some folks like to keep all their accounts with one provider and choose to pay a bit more in basis points. For example, the Fidelity 529 has an equity option for 0.11% ER and Vanguard has a 529 with 0.18% ER for equity. NY's 529 has a fixed 0.15% ER for all its Vanguard funds.

https://www.fidelity.com/529-plans/new-hampshire
https://investor.vanguard.com/529-plan/ ... nd-returns
https://www.nysaves.org/home/why-ny-529 ... ights.html

megabad
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Re: Best 529 plan for California, for self

Post by megabad » Thu Aug 09, 2018 2:04 pm

billthecat wrote:
Thu Aug 09, 2018 11:29 am
For a Californian who wants a 529 plan for himself, to cover some education costs in retirement to keep the mind active, what would be the best 529 plan? There are no tax benefits in California so everything can be considered. The California plan itself doesn't seem too bad - for an individual index fund of all US equity, the plan ER is .03% and the fund ER is .05%, for a total of .08%. Is there a better option?
I don't understand. If you live in California when you withdraw the money for qualified purposes, the money will be state income tax free correct? That is the tax benefit.

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indexfundfan
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Re: Best 529 plan for California, for self

Post by indexfundfan » Thu Aug 09, 2018 2:17 pm

megabad wrote:
Thu Aug 09, 2018 2:04 pm
billthecat wrote:
Thu Aug 09, 2018 11:29 am
For a Californian who wants a 529 plan for himself, to cover some education costs in retirement to keep the mind active, what would be the best 529 plan? There are no tax benefits in California so everything can be considered. The California plan itself doesn't seem too bad - for an individual index fund of all US equity, the plan ER is .03% and the fund ER is .05%, for a total of .08%. Is there a better option?
I don't understand. If you live in California when you withdraw the money for qualified purposes, the money will be state income tax free correct? That is the tax benefit.
While all 529 plans have the benefit that withdrawals for qualified purposes are tax free, OP was referring to the fact that in some states, you can get a state income tax deduction if you contribute to that state's 529 plan.

CA does not offer such a benefit so there is no reason to prioritize the CA 529 plan over plans from other states.
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tesuzuki2002
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Re: Best 529 plan for California, for self

Post by tesuzuki2002 » Thu Aug 09, 2018 4:26 pm

billthecat wrote:
Thu Aug 09, 2018 11:29 am
For a Californian who wants a 529 plan for himself, to cover some education costs in retirement to keep the mind active, what would be the best 529 plan? There are no tax benefits in California so everything can be considered. The California plan itself doesn't seem too bad - for an individual index fund of all US equity, the plan ER is .03% and the fund ER is .05%, for a total of .08%. Is there a better option?
I also live in CA... and have been looking at 529.... I am still weighing towards the UTAH plan / Vanguard option...

megabad
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Re: Best 529 plan for California, for self

Post by megabad » Thu Aug 09, 2018 4:32 pm

indexfundfan wrote:
Thu Aug 09, 2018 2:17 pm
While all 529 plans have the benefit that withdrawals for qualified purposes are tax free, OP was referring to the fact that in some states, you can get a state income tax deduction if you contribute to that state's 529 plan.

CA does not offer such a benefit so there is no reason to prioritize the CA 529 plan over plans from other states.
Ok. I guess to me that isn't the same as saying "there are no tax benefits in CA". In fact the state tax benefit for 529s in CA is actually one of the biggest in the entire United States. The only time you would have no state tax benefit would be in a state with no income tax.

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