best 529 plan for california residents

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Topic Author
gram
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Joined: Mon Feb 18, 2019 5:51 pm

best 529 plan for california residents

Post by gram » Sun Apr 07, 2019 6:35 pm

What is the criteria for california residents to buy 529 plan for their 5 year old kid.
Does the tax bracket matter at all.

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grabiner
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Re: best 529 plan for california residents

Post by grabiner » Sun Apr 07, 2019 6:46 pm

California doesn't offer a state tax benefit for contributions to its 529 plan, so you can use a plan for any state and get the same tax benefit for both federal and state taxes. Your tax bracket doesn't matter unless you need to make a non-qualified withdrawal (because the balance exceeds the qualified educational expenses); if that happens, you pay income tax on any gain, and sometimes a 10% penalty depending on the reason for the withdrawal.
Wiki David Grabiner

Topic Author
gram
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Joined: Mon Feb 18, 2019 5:51 pm

Re: best 529 plan for california residents

Post by gram » Mon Apr 08, 2019 10:19 am

Not sure why Vanguard chose to offer Nevada 529 plan to their customers. Does the Nevada plan make sense?

MMLC3
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Re: best 529 plan for california residents

Post by MMLC3 » Mon Apr 08, 2019 9:08 pm

grabiner wrote:
Sun Apr 07, 2019 6:46 pm
California doesn't offer a state tax benefit for contributions to its 529 plan, so you can use a plan for any state and get the same tax benefit for both federal and state taxes. Your tax bracket doesn't matter unless you need to make a non-qualified withdrawal (because the balance exceeds the qualified educational expenses); if that happens, you pay income tax on any gain, and sometimes a 10% penalty depending on the reason for the withdrawal.

+1 to this

We went with Utah/UESP plan and have had it for last 8 years.
Good low cost fund options.
No real advantage going with CA.

majiaknight
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Re: best 529 plan for california residents

Post by majiaknight » Mon Apr 08, 2019 10:25 pm

If you simply want to manage a Boglehead 2-fund index portfolio, check the CA 529 ScholarShare's index funds which had the lowest ER compared w/ others per last check probably 2 years ago.

viewtopic.php?f=1&t=222646

HEDGEFUNDIE
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Re: best 529 plan for california residents

Post by HEDGEFUNDIE » Mon Apr 08, 2019 11:52 pm

MMLC3 wrote:
Mon Apr 08, 2019 9:08 pm
No real advantage going with CA.
Incorrect.
majiaknight wrote:
Mon Apr 08, 2019 10:25 pm
check the CA 529 ScholarShare's index funds which had the lowest ER compared w/ others
Correct.

Topic Author
gram
Posts: 55
Joined: Mon Feb 18, 2019 5:51 pm

Re: best 529 plan for california residents

Post by gram » Tue Apr 09, 2019 10:55 pm

Not sure why Vanguard chose to offer Nevada 529 plan to their customers. Does the Nevada plan make sense?

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