529 Rollover/out Question

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jbsmith05
Posts: 182
Joined: Fri Apr 01, 2016 2:01 pm

529 Rollover/out Question

Post by jbsmith05 » Fri Jan 11, 2019 9:21 am

Question...I'm not a big fan of 529's because of the fact that it ties up your money to education and who knows if your child will need it, go into the military, etc.

That said - I still put a little bit of money in 529s for my children. When I started this a few years ago I opted for my state run fund because I can deduct my contributions from my state income taxes (no max), and I'd pay no income tax when using the funds later - assuming I'm still living in the same state.

The problem I have is with the custodian - Columbia Threadneedle - I have very little options in terms of funds to choose, they are generic names and they make it very hard to see what the underlying fund is (typically a Columbia Threadneedle fund). I can only have one fund invested per 529 (not sure if this is the way 529's work or if I use a Vanguard or Fido 529 if I can invest in multiple funds at the same time). I can only change the fund 2 times a year. Or I can just pick the age based options. ER's are .20% and up for most.

Since I'm not socking 100's or even 10's of thousands of dollars into this per year I'm thinking the tax advantages may not be worth the crappy interface/restrictions from the custodian.

So my questions are this...
a) Can I just roll them over to another 529 just like I'd roll anything else into my Fido or Vanguard account...nothing special to know about in terms of taxes or anything by moving the funds?
b) For those with a 529 held at Fido, VG, or others...does it operate just like another account where you can invest the $ in multiple funds - say Total Stock, Intl, & Bond indexes??

fabdog
Posts: 639
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: 529 Rollover/out Question

Post by fabdog » Fri Jan 11, 2019 9:26 am

you can roll your 529 into another state's plan. Vanguard runs plans for Utah, Nevada, and NY. They also have menus of funds or age based selections (but much better expenses). I haven';t seen one that looks like a brokerage account. Each plan is sponsored by a state and administered by a fund company

On the tax side, no federal consequences. Your state may require you to pay back any state tax benefits you gained when making contributions. The plan website or your states dept of revenue site should have that info

Mike

Topic Author
jbsmith05
Posts: 182
Joined: Fri Apr 01, 2016 2:01 pm

Re: 529 Rollover/out Question

Post by jbsmith05 » Fri Jan 11, 2019 9:32 am

fabdog wrote:
Fri Jan 11, 2019 9:26 am
you can roll your 529 into another state's plan. Vanguard runs plans for Utah, Nevada, and NY. They also have menus of funds or age based selections (but much better expenses). I haven';t seen one that looks like a brokerage account. Each plan is sponsored by a state and administered by a fund company

On the tax side, no federal consequences. Your state may require you to pay back any state tax benefits you gained when making contributions. The plan website or your states dept of revenue site should have that info

Mike
Ahh so I'm still going to be bound by limited investment options. My state doesn't recapture based on the info I've been able to find here on the Wiki and the state's site.

What do I get if I just went to Fido (I have a bunch of stuff with Fido already) and opened a 529 there. How does that tie to a state?

fabdog
Posts: 639
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: 529 Rollover/out Question

Post by fabdog » Fri Jan 11, 2019 9:41 am

Fidelity runs plans for NH, MA, AZ, and DE.

You can go to the Fidelity site and see what they offer for each of the states plans.

Every 529 is sponsored by a state. That's just the way they work. You can invest in any state's plan you desire. When we lived in a state with no state tax deduction we used the vanguard plan they run for Nevada. When we moved to a different state with a state tax deduction and good funds, we switched to that.

So if you like Fidelity, they have 4 choices for you to choose from to open a 529 with them. Each will have different options and fees depending on the state

Mike

ModifiedDuration
Posts: 98
Joined: Sat Dec 05, 2015 4:33 pm

Re: 529 Rollover/out Question

Post by ModifiedDuration » Fri Jan 11, 2019 11:39 am

The Private College 529 Plan is not run by a state (there’s always an exception to the rule):

https://www.privatecollege529.com/OFI52 ... etails.jsp

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