Which 529 plan did you choose and why? [Help select a 529 plan]

[Rothmanj42]

Hi everyone. My husband and I are currently looking at 529 plans. We live in a state who’s 529 plan does NOT have a tax deduction benefit. We are currently considering the Vanguard 529, but are also looking at these state plans: Illinois, Ohio, New York. Does anyone recommend we also consider another state? Which 529 did you choose and why? Thank you all!

[forkhorn]

I chose Utah, but it was about 5 years ago and I have not kept up with the evolution of other plans. No complaints thus far, but of course I haven't tried to pull money out, and won't for quite a few more years. At the time, it was a good option with low costs and good options.

[Rothmanj42]

I chose Utah, but it was about 5 years ago and I have not kept up with the evolution of other plans. No complaints thus far, but of course I haven't tried to pull money out, and won't for quite a few more years. At the time, it was a good option with low costs and good options.

Thank you forkhorn for the information! Started looking into that one this morning

[livesoft]

We chose Utah more than 15 years ago because it had Vanguard index funds and low expenses. At that time many states did not have index funds in their 529 plans, so it was easy.

Later we also selected the Ohio 529 plans for its Vanguard index funds and low fees.

There was a benefit to using two different state plans with one state plan using all equity funds owned by one spouse and the other state plan using all fixed income / bond funds owned by the other spouse. I don't think that benefit exists anymore.

There is a subtle difference between the Utah plan and Ohio plan: Utah plans uses the fund NAVs in your account while the Ohio plan wraps the funds in the Ohio 529 wrapper much like collective investment trust. That means price quotes for the Utah plan are available everywhere, but the price quotes for the Ohio plan are only available on the Ohio plan web site.

And since we are now done and finished with 529 plans, lots of states now use Vanguard funds in their plans.

[Jboglecmu]

We have an Illinois 529 with Bright Start. Illinois citizens get a state tax deduction. If not, we would probably go with the Nevada plan. The Illinois plan has low-cost Vanguard age-based funds or you can choose from a variety of other solid funds. You probably can't go wrong with it.

[WarAdmiral]

We had Utah and Maryland. One under each spouse.

Anyway, after MA started giving tax breaks, i moved the Utah one to MA, still investing in SP500 index.

[FrugalInvestor]

We chose the Vanguard (Nevada) 529 13 years ago and selected one of the automatically rebalancing age-based Vanguard fund options. It's been convenient to track it along with our other Vanguard accounts on our accounts webpage and to transfer funds into it from those accounts.

[runner3081]

We are in Arizona and selected an Ohio plan for Vanguard funds, this was set up about 9 years ago.

[marti038]

We were in Utah until my home state (AL) started a program that included a tax break on contributions.

I was very pleased with the investment options and their relatively low costs. Managing the accounts online was easy too.

[likashing]

We live in a state where there is no tax benefit by going with the local plan.

We have 100% stock in the 529 because we want to generate as much tax-free capital gain possible (i.e. maximize the benefit of a 529). We look at our portfolios holistically and have enough bonds in the 401k/IRAs. Our preferred stock allocation is 60/40 US/international.

We chose Nevada because it has a Vanguard "aggressive" fund which is 60/40 US/international. It makes things simple for us. We make regular contributions to the account (1 fund), and also move some after-tax cash to it during market dips. We can also see everything with our Vanguard log-in.

[1789]

We are using Oregon state plan which gives 300$ tax max credit per year/kid per 6k or so. I am in the process of transferring these accounts to Fido to keep everything together. OR doesn't have recapture tax penalty. I might continue to add some more to state plan and do another transfer couple years later until we stop contributing. Plan is to contribute 30k per kid before they are 5 year old and then stop. All funds are invested in 100% US TSM until they are 10 year old and then we will do some changes.

[sycamore]

I live in a state that doesn't provide any tax benefit for the in-state plan. I picked Nevada's Vanguard 529 plan because (1) the choice of funds and age-based plans gave me the choices I wanted; (2) the overall fees were not the lowest but were low enough; and (3) the online 529 account info is integrated with my other Vanguard accounts.

[Rothmanj42]

We live in a state where there is no tax benefit by going with the local plan.

We have 100% stock in the 529 because we want to generate as much tax-free capital gain possible (i.e. maximize the benefit of a 529). We look at our portfolios holistically and have enough bonds in the 401k/IRAs. Our preferred stock allocation is 60/40 US/international.

We chose Nevada because it has a Vanguard "aggressive" fund which is 60/40 US/international. It makes things simple for us. We make regular contributions to the account (1 fund), and also move some after-tax to it during market dips. We can also see everything with our Vanguard log-in.

Thank you so much for this info! Do you by any chance know if there is a benefit going through Nevada, versus just going directly through vanguard? We would most likely invest in the 529 the exact way you are doing yours.

[Rothmanj42]

I live in a state that doesn't provide any tax benefit for the in-state plan. I picked Nevada's Vanguard 529 plan because (1) the choice of funds and age-based plans gave me the choices I wanted; (2) the overall fees were not the lowest but were low enough; and (3) the online 529 account info is integrated with my other Vanguard accounts.

Thank you for the info! Do you by any chance know if there is a benefit going through Nevada state, versus going directly through Vanguard? Thanks again!

[dcdowden]

I helped my elderly parents set up and use a Vanguard (Nevada) 529 plan for a couple of grandchildren (my niece and nephew). It was an overall good experience - low expenses and very attractive returns over the last 10 years. It was also very easy to distribute money when the time came. We chose to have Vanguard send the money directly to the schools. All we needed was their Student ID/Account number. My Father passed away before one of the accounts was distributed, and it was straightforward to move the account into my Mother's name as successor owner. They had given my POA over the accounts, so I did all the transactions for them on-line.

We live in Illinois which provides up to $20K state income tax deduction for contributions to the Illinois Bright Start Plan, so my wife and I are now using that for our Grandson. It has been easy to make contributions and change investment options, but we are still a long way off from making any distributions. But so far, so good.

[Rothmanj42]

I helped my elderly parents set up and use a Vanguard (Nevada) 529 plan for a couple of grandchildren (my niece and nephew). It was an overall good experience - low expenses and very attractive returns over the last 10 years. It was also very easy to distribute money when the time came. We chose to have Vanguard send the money directly to the schools. All we needed was their Student ID/Account number. My Father passed away before one of the accounts was distributed, and it was straightforward to move the account into my Mother's name as successor owner. They had given my POA over the accounts, so I did all the transactions for them on-line.

We live in Illinois which provides up to $20K state income tax deduction for contributions to the Illinois Bright Start Plan, so my wife and I are now using that for our Grandson. It has been easy to make contributions and change investment options, but we are still a long way off from making any distributions. But so far, so good.

Thank you so much for the information, and sincere condolences for your father.

[sycamore]

I live in a state that doesn't provide any tax benefit for the in-state plan. I picked Nevada's Vanguard 529 plan because (1) the choice of funds and age-based plans gave me the choices I wanted; (2) the overall fees were not the lowest but were low enough; and (3) the online 529 account info is integrated with my other Vanguard accounts.

Thank you for the info! Do you by any chance know if there is a benefit going through Nevada state, versus going directly through Vanguard? Thanks again!

To clarify, Nevada has six 529 programs run by different organizations. I don't know why they have that many, but they do.

I use the Nevada 529 known officially as the Vanguard 529 College Savings Plan. Vanguard is the manager for that plan so you would directly work with Vanguard and not the state.

Browse to https://investor.vanguard.com/529-plan/ ... d-529-plan for some info and a button to "Open a Vanguard 529 plan". Hope that helps!

[snailderby]

-- Does your state offers a tax deduction that is limited to contributions to your state's 529 plan? If so, use that plan unless it's absolutely horrible. If not...

-- Do you care about the convenience of managing all of your accounts with one login? If so, consider Nevada (Vanguard), New Hampshire (Fidelity), or Kansas (Schwab). If not...

-- Do you want to tilt to small-cap value in your 529 plan? If so, consider Utah. If not...

-- Consider any state with a low-cost plan that you're eligible for, such as California or Illinois. See https://www.savingforcollege.com/529_fe ... lowest.php.

[likashing]

We live in a state where there is no tax benefit by going with the local plan.

We have 100% stock in the 529 because we want to generate as much tax-free capital gain possible (i.e. maximize the benefit of a 529). We look at our portfolios holistically and have enough bonds in the 401k/IRAs. Our preferred stock allocation is 60/40 US/international.

We chose Nevada because it has a Vanguard "aggressive" fund which is 60/40 US/international. It makes things simple for us. We make regular contributions to the account (1 fund), and also move some after-tax to it during market dips. We can also see everything with our Vanguard log-in.

Thank you so much for this info! Do you by any chance know if there is a benefit going through Nevada, versus just going directly through vanguard? We would most likely invest in the 529 the exact way you are doing yours.

We opened the account a couple years ago through below:

https://investor.vanguard.com/529-plan/

[emlowe]

I use Fidelity's default option - which is New Hampshire and target-date Index option.

[Living Free]

... Do you by any chance know if there is a benefit going through Nevada state, versus going directly through Vanguard? Thanks again!

I believe that all 529 plans are sponsored by a state. The vanguard plan is a Nevada plan. That's the one that I use (I live in a no income tax state, so no benefit to using our state's plan)

[lakpr]

I chose New York plan because I work in New York City (but resident in New Jersey) and receive a tax break on the 529 contributions. It's also consistently ranked in the top five plans in the country

[deltaneutral83]

I just glanced at Utah's and they had a 70/30 Domestic/Intl fund with a combined expense/admin ratio of 15.3 bps. If you want exclusively Domestic TSM, you might be able to beat that in another state, but I don't know that a combination will have lower than that (all of this implies you get no tax benefit in your state which OP is).

[steadyhand]

Michigan through TIAA is a good one too.

[goodenyou]

Utah 18 years ago. It was considered the best plan back then, but many Plans have improved. I think NY, Utah and Nevada are rated up there today. I am spending FROM Utah 529 and an enormous clip right now. It has been relatively easy to transfer funds, but there are some issues with timing the payments and lead time. Also, issues with beating academic/calendar year deadlines. I have one in graduate school, one in undergraduate and one who will start next year. I had a small fortune in it several years ago. Not so much now, as expected.

[wickywack]

Vanguard (Nevada), primarily because it's well integrated with everything else I had there. I also liked the age-based options. My kid is in college, and it's almost all bonds (automatically). Was nice not to worry about it during the market crash earlier this year.

FWIW, Vanguard 529s count toward Voyager/Flagship status as well.

[majiaknight]

I live in CA w/o state incentives and have chosen CA Scholar Share 529 because I only wanted to invest single-fund low-cost stock index in 529 and it offered the lowest ER among several popular plans by other states I investigated several years ago.

Today I just checked the fund ER ag which IMO was still quite low:
https://www.scholarshare529.com/researc ... fund.shtml
https://www.scholarshare529.com/documen ... iption.pdf

Index U.S. Large Cap Equity Portfolio (TIAA-CREF S&P 500 Index Fund (TISPX)): ER 0.06%
Index U.S. Equity Portfolio (TIAA-CREF Equity Index Fund (TIEIX): ER 0.06%

(PS: I also just found in my previous reply on the same topic (viewtopic.php?f=1&t=222646) the fund ER was 0.08% in 2017 so it's great to see the CA 529 management team has been driving down the cost)

[L82GAME]

-- Does your state offers a tax deduction that is limited to contributions to your state's 529 plan? If so, use that plan unless it's absolutely horrible. If not...

-- Do you care about the convenience of managing all of your accounts with one login? If so, consider Nevada (Vanguard), New Hampshire (Fidelity), or Kansas (Schwab). If not...

-- Do you want to tilt to small-cap value in your 529 plan? If so, consider Utah. If not...

-- Consider any state with a low-cost plan that you're eligible for, such as California or Illinois. See https://www.savingforcollege.com/529_fe ... lowest.php.

+1

[beyou]

I chose New York plan because I work in New York City (but resident in New Jersey) and receive a tax break on the 529 contributions. It's also consistently ranked in the top five plans in the country

I too used the NY plan, it had low cost index funds and was very well run from a customer service standpoint.
Everything went smoothly both investing and later spending when my kids went to college.
Was very happy but not as happy as I am not that we are done paying tuition.