Where to open 529 savings plan?

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Topic Author
joelly
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Where to open 529 savings plan?

Post by joelly » Wed Apr 24, 2019 4:04 pm

For 401K, my employer use Fidelity. Should I use Fidelity? Or should I use Vanguard or TRowe Price? Or some other company? Does it make any difference or not? I live in Los Angeles, CA.

I'm currently pregnant and due in 6 weeks. I want to start saving for her 529 this year.

Thank you in advance.

-Joelly

mighty72
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Re: Where to open 529 savings plan?

Post by mighty72 » Wed Apr 24, 2019 4:06 pm

The scholarshare plan offered by CA is pretty good. It has several low cost options. CA has no tax benefits for contributing so you can choose any other plan too. I use the CA scholarshare plan so no inputs on the other options.

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RickBoglehead
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Re: Where to open 529 savings plan?

Post by RickBoglehead » Wed Apr 24, 2019 4:08 pm

It's not that simple. Many states have a state-specific plan that gives you a tax break. If you use a different plan, then you don't get that break. I'd suggest you change the title to include (California Resident) at the end.

We use Utah's 529, now called My529, which is one of the top in the country. The plan was chosen because we didn't get a in-state tax credit, and this was the best plan in existence. It has many Vanguard fund choices at low cost.

Edit - I see a California-knowledgeable person has replied.
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veggivet
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Re: Where to open 529 savings plan?

Post by veggivet » Wed Apr 24, 2019 4:14 pm

Since state tax breaks aren't an issue in your case, you may want to consider www.NYSaves.org, which uses Vanguard funds and has low expenses.
If you watch your pennies, your dollars will take care of themselves.

tesuzuki2002
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Re: Where to open 529 savings plan?

Post by tesuzuki2002 » Wed Apr 24, 2019 4:40 pm

joelly wrote:
Wed Apr 24, 2019 4:04 pm
For 401K, my employer use Fidelity. Should I use Fidelity? Or should I use Vanguard or TRowe Price? Or some other company? Does it make any difference or not? I live in Los Angeles, CA.

I'm currently pregnant and due in 6 weeks. I want to start saving for her 529 this year.

Thank you in advance.

-Joelly

I recently went with ScholarShare this past year myself... They were offering a bonus for opening an account... I've seen in the past where they offered promotions for 5/29 as in May 29th... so you might see if something pops up for that and if not just proceed with opening on account.

cheers!

Congrats and I hope everything goes well !!

Spirit Rider
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Re: Where to open 529 savings plan?

Post by Spirit Rider » Wed Apr 24, 2019 5:16 pm

Even if you weren't a CA resident, the CA ScholarShare 529 plan is the lowest cost nationwide plan managed by TIAA-CREF.

The UTAH 529 plan was once one of the lowest cost nationwide plans. It is no longer even in the top ten.

Grt2bOutdoors
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Re: Where to open 529 savings plan?

Post by Grt2bOutdoors » Wed Apr 24, 2019 5:22 pm

Spirit Rider wrote:
Wed Apr 24, 2019 5:16 pm
Even if you weren't a CA resident, the CA ScholarShare 529 plan is the lowest cost nationwide plan managed by TIAA-CREF.

The UTAH 529 plan was once one of the lowest cost nationwide plans. It is no longer even in the top ten.
That’s because the administrative fee is high at 0.15%. Hard to understand why it’s so high when assets in the plan continue to bloom. One would think those fees ought to come down, but they don’t.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Spirit Rider
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Re: Where to open 529 savings plan?

Post by Spirit Rider » Wed Apr 24, 2019 5:40 pm

Grt2bOutdoors wrote:
Wed Apr 24, 2019 5:22 pm
Spirit Rider wrote:
Wed Apr 24, 2019 5:16 pm
Even if you weren't a CA resident, the CA ScholarShare 529 plan is the lowest cost nationwide plan managed by TIAA-CREF.

The UTAH 529 plan was once one of the lowest cost nationwide plans. It is no longer even in the top ten.
That’s because the administrative fee is high at 0.15%. Hard to understand why it’s so high when assets in the plan continue to bloom. One would think those fees ought to come down, but they don’t.
Yes, I don't understand this. As the actual expense ratios of the plans have come down to a low as 0.02% in some cases. The administrative fees have risen. The cost difference in many of the plans are the fees the states themselves are extracting. I don't know, but maybe with the cash inflows, they are looking at these plans as revenue sources.

Jmh04j
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Re: Where to open 529 savings plan?

Post by Jmh04j » Wed Apr 24, 2019 6:17 pm

I am using Schwab and am happy. The fees are not as low as Vanguard but the low minimums made it a good option for me at the time. NOTE - Be sure to stay away from the actively managed options; the low cost index funds are more than adequate IMHO.

Best,

Jim

absolutelybillsmood
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Re: Where to open 529 savings plan?

Post by absolutelybillsmood » Wed Apr 24, 2019 6:26 pm

Fidelity's Unique 529 (New Hampshire) has index options which are reasonably inexpensive (if it's easier to have everything in one place.) I use the NH 2030 index option.

Topic Author
joelly
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Re: Where to open 529 savings plan?

Post by joelly » Thu Apr 25, 2019 12:49 pm

I'm looking at the CA ScholarShare 529 plan. I plan to start contributing now before the baby is born. However, the application is asking the beneficiary information (i.e. Name, SSN, etc). Can I leave this blank for now since my baby girl is not even born yet? It's another 6 weeks to go and I can't wait. I'm so tired to function now.

miamivice
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Re: Where to open 529 savings plan?

Post by miamivice » Thu Apr 25, 2019 1:03 pm

joelly wrote:
Thu Apr 25, 2019 12:49 pm
I'm looking at the CA ScholarShare 529 plan. I plan to start contributing now before the baby is born. However, the application is asking the beneficiary information (i.e. Name, SSN, etc). Can I leave this blank for now since my baby girl is not even born yet? It's another 6 weeks to go and I can't wait. I'm so tired to function now.
No, put yourself or Baby Girl's dad as the beneficiary and then when Baby Girl is older you can change the beneficiary to her. No rush.

I have (1) 529 with my wife as the beneficiary and (1) 529 with me as the beneficary. Both are for our two kids, but we're in no hurry to change the beneficiary.

Ybsybs
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Re: Where to open 529 savings plan?

Post by Ybsybs » Thu Apr 25, 2019 1:29 pm

Ohio's 529 at CollegeAdvantage.com is considered very good for those who don't have a tax reason to use their own state plans. Choose the direct plan though, not the financial advisor plan with the extra fees added on by Blackrock.

Within the Ohio 529 direct plan, I recommend the Vanguard Age-Based plans if saving for a specific kid.

Ybsybs
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Re: Where to open 529 savings plan?

Post by Ybsybs » Thu Apr 25, 2019 1:36 pm

joelly wrote:
Thu Apr 25, 2019 12:49 pm
I'm looking at the CA ScholarShare 529 plan. I plan to start contributing now before the baby is born. However, the application is asking the beneficiary information (i.e. Name, SSN, etc). Can I leave this blank for now since my baby girl is not even born yet? It's another 6 weeks to go and I can't wait. I'm so tired to function now.
When I was pregnant I opened a 529 with myself as both the owner and the beneficiary. Then I was able to generate a U-gift Code to allow the friends and family at the baby shower who wanted to send in $10-$25 contributions to do so. I was touched by those gifts and unlike the Babies R Us gift cards, I didn't have to scramble later to use them before a store went out of business.

After the kid was born and she got a social security number, I visited my bank notary and filled out the two page form necessary to change the beneficiary. I was using the Ohio 529 and found all the necessary paperwork on the website. California likely has a similar easy transfer method.

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marti038
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Re: Where to open 529 savings plan?

Post by marti038 » Thu Apr 25, 2019 1:39 pm

We used Utah's 529 for several years until Alabama allowed deductions for contributions to its 529 plan.

If my state did not allow deductions for 529 contributions, I'd go back to Utah mainly because of its low cost and I liked the investment options there. It was also very easy to manage my account on their website.

EDIT: I just saw some notes above about the admin fees increasing in Utah. You should check that out first.

Spirit Rider
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Re: Where to open 529 savings plan?

Post by Spirit Rider » Thu Apr 25, 2019 3:45 pm

marti038 wrote:
Thu Apr 25, 2019 1:39 pm
EDIT: I just saw some notes above about the admin fees increasing in Utah. You should check that out first.
It isn't so much that the total expenses in UTAH have increased, but as mutual fund expense ratios have declined UTAH has increased other fees to keep the net about the same.

The CA ScholarShare plan TSM index fund net ER is 0.08%, AZ/DE/MA/NH Fidelity 529 plans TSM index net ERs are 0.11% and Utah my529 plan TSM index fund net ER is 0.18%. Note: CA takes no state administrative fees on index funds, that is one reason the net ERs are lower.

I don't think one should make a change in your 529 based on these small differences in net ERs, but I think you might want to use them in an evaluation of your first 529.

Topic Author
joelly
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Re: Where to open 529 savings plan?

Post by joelly » Tue Apr 30, 2019 4:53 pm

Thanks Everyone. Appreciate all the lessons shared.

I will start contributing to the CA ScholarShare 529 plan. How would I know if it ever going to be enough? Will it be enough if it has $200K in it by the time she is 18?

I am thinking way too much ahead I know. But I just thought I throw it out there and see if anyone can illuminate me.

Thank you so much for your help.

Grt2bOutdoors
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Re: Where to open 529 savings plan?

Post by Grt2bOutdoors » Tue Apr 30, 2019 5:08 pm

joelly wrote:
Tue Apr 30, 2019 4:53 pm
Thanks Everyone. Appreciate all the lessons shared.

I will start contributing to the CA ScholarShare 529 plan. How would I know if it ever going to be enough? Will it be enough if it has $200K in it by the time she is 18?

I am thinking way too much ahead I know. But I just thought I throw it out there and see if anyone can illuminate me.

Thank you so much for your help.
Use the Vanguard College Planner: insert year zero (child not born yet), amount you will contribute each month or year, rate of return say 5%, rate of tuition inflation say 4% or just go with the default rates of return and inflation if you wish, put in a dollar amount approximating the cost of current tuition. The planner will calculate the amount you will cover on a forecasted basis for years 18-22. Each year, do the same, only put in the current balance saved and the current college costs as known when you use the calculator. You will have a better appreciation for what you will be able to pay for and what may be out of reach without some grant/merit/loans.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Broken Man 1999
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Re: Where to open 529 savings plan?

Post by Broken Man 1999 » Tue Apr 30, 2019 5:25 pm

I use the Vanguard 529 plan, I think it is the Nevada plan. The ERs aren't the lowest, but they are low enough, plus everything is collected in one place, TIRAs, Roths, taxable account, and 529 plans for the grandchildren. I can see everything on one page when I sign on at Vanguard.

I have all four plans invested in the aggressive growth AA, the plans will automatically adjust to be more conservative as the grandchildren age.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Topic Author
joelly
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Joined: Mon Oct 27, 2008 11:22 am

Re: Where to open 529 savings plan?

Post by joelly » Tue Apr 30, 2019 5:48 pm

Grt2bOutdoors wrote:
Tue Apr 30, 2019 5:08 pm
joelly wrote:
Tue Apr 30, 2019 4:53 pm
Thanks Everyone. Appreciate all the lessons shared.

I will start contributing to the CA ScholarShare 529 plan. How would I know if it ever going to be enough? Will it be enough if it has $200K in it by the time she is 18?

I am thinking way too much ahead I know. But I just thought I throw it out there and see if anyone can illuminate me.

Thank you so much for your help.
Use the Vanguard College Planner: insert year zero (child not born yet), amount you will contribute each month or year, rate of return say 5%, rate of tuition inflation say 4% or just go with the default rates of return and inflation if you wish, put in a dollar amount approximating the cost of current tuition. The planner will calculate the amount you will cover on a forecasted basis for years 18-22. Each year, do the same, only put in the current balance saved and the current college costs as known when you use the calculator. You will have a better appreciation for what you will be able to pay for and what may be out of reach without some grant/merit/loans.
Thank you so much! This is very helpful. I'll reevaluate yearly on her birthday. Thanks again!

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