CA resident 529

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Abk911
Posts: 7
Joined: Thu Aug 09, 2018 1:22 pm

CA resident 529

Post by Abk911 » Fri Aug 10, 2018 3:20 pm

Dear Bloggers,

i read some posts but still confused hence my question:

Why are many people recommending the Utah / Nevada plan for 529 even when they are CA residents. How does that work? am assuming there are no deductions allowed for CA 529 plan. But would that not be the same for a different state plan. in that case whats the benefit? also if one buys a nevada or utah plan do they have to have to send kid to those states or?

pls do help guide.

HEDGEFUNDIE
Posts: 226
Joined: Sun Oct 22, 2017 2:06 pm

Re: CA resident 529

Post by HEDGEFUNDIE » Fri Aug 10, 2018 3:26 pm

The only reason people suggest Utah and Nevada 529s is because they include Vanguard funds, and if you have other assets with Vanguard, it will all count towards meeting Vanguard's Voyager or Flagship thresholds of service. You can still use the 529 money for college anywhere.

To be honest for a CA resident (or a resident of any state without a 529 tax deduction) it really doesn't matter which state's 529 you pick. They pretty much all have low-fee fund options.

thomase
Posts: 141
Joined: Fri Feb 13, 2009 7:48 pm

Re: CA resident 529

Post by thomase » Fri Aug 10, 2018 3:53 pm

I'm a long time California resident and have accounts with California Scholarshare program aka state sponsored 529 plan. It doesn't matter which state plan you choose, California does not offer a tax deduction for 529 contribution. You just choose the plan that has the choices you want or is convenient for you to manage. At one point I looked into rolling over the CA 529 to Vanguard plans, the only advantage being able to access all investments under one website, but I never went through with it. The CA 529 was managed by TIAA-CREF, moved to Fidelity, and now back with TIAA-CREF. I've already started withdrawing for college expenses, and no issues so far.

Abk911
Posts: 7
Joined: Thu Aug 09, 2018 1:22 pm

Re: CA resident 529

Post by Abk911 » Fri Aug 10, 2018 4:40 pm

so... if i want vanguard, i just cant do CA? or now do they have any CA plan?

NoHeat
Posts: 123
Joined: Sun Sep 18, 2016 10:13 am

Re: CA resident 529

Post by NoHeat » Sat Aug 11, 2018 12:00 am

I have used the 529 plans in four states, and they all offer Vanguard funds:
- the Utah plan formerly called UESP and now called my529,
- Illinois Brightstart,
- College Savings Iowa,
- Colorado CollegeInvest.
Probably other 529s offer Vanguard funds also, but I’ve used all these, and all provided me good service.

As mentioned by others, if you live in CA, there’s no reason to prefer a CA based 529 plan. I would suggest choosing a plan that has fees and funds you like, and disregard which state runs it. Luckily, 529 fees and fund offerings have improved widely since I started nearly 20 years ago.

Some programs offer unusual options. For example, there’s the stable value fund in Colorado CollegeInvest, which is better than a money market fund for the last few years before withdrawal, when you need stability. And there’s the my529fund which offers DFA funds as well as Vanguard funds.

thomase
Posts: 141
Joined: Fri Feb 13, 2009 7:48 pm

Re: CA resident 529

Post by thomase » Sat Aug 11, 2018 4:17 pm

Abk911 wrote:
Fri Aug 10, 2018 4:40 pm
so... if i want vanguard, i just cant do CA? or now do they have any CA plan?
That's correct, if you want the Vanguard 529 it won't be California. Also the California Scholarshare program does not have Vanguard fund choices, unlike some other state plans.

mega317
Posts: 2450
Joined: Tue Apr 19, 2016 10:55 am

Re: CA resident 529

Post by mega317 » Sat Aug 11, 2018 9:33 pm

If you're at Fidelity I'd use their 529. A few states use them.

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