Is switching 529 plans worth it?

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Topic Author
shareenmd
Posts: 33
Joined: Sun Jun 07, 2020 4:08 pm

Is switching 529 plans worth it?

Post by shareenmd »

Last night I terminated the relationship with my advisor (thanks to the teaching on this site and White Coat Investor!). I need advice on the following:

1. I initiated the transfer of accounts from TDAmeritrate Institutional to Vanguard. The Vanguard rep told me there may be a fee to sell the DFA funds at Vanguard. Any way to avoid this? The advisor had me in about 15 of these funds so if they charge $50 per fund it will add up.

2. I have 4 children, each with a 529 plan. My kids are 17, 15, 15, 11. The 3 older kids have 529 with American Funds and the youngest has the Utah plan. I have read that the American Funds have some of the highest fees. Is it worth switching the other 3 plans to Utah or another one with lower fees? I was thinking that it may not be worth it because we will start using the money for my son (Senior in high school) soon but actually he will have free tuition here in Florida due to Bright Futures scholarship. My twin 15 year olds will also likely get this scholarship. So, there is a good chance that there will be money in these accounts for years to come.

3. After reading extensively on this site and WCI I have a good idea about how to set up my asset allocation once the funds settle in Vanguard. I was planning to put approx 10% of funds into a REIT (probably in our Roth accounts). My husband and I are just finishing construction on a large medical office building which will house my practice. In addition, we will be renting out the rest of the building. We put about $600,000 of our personal money into the project and we will owe just over $3million. Would you decrease the % invested in REIT to take into account the significant amount of money we have invested in our building?

Thank you in advance for your time! Any other suggestions (as I transition to DIY) would be much appreciated.
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Eagle33
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Re: Is switching 529 plans worth it?

Post by Eagle33 »

1. How much would it cost to sell at current brokerage and transfer cash?

2. How to Use a 529 Plan When Your Child Wins a Scholarship
Even if your child wins a full scholarship, you can use money from a 529 college-savings plan for things other than tuition without triggering taxes or a penalty.
3. What % of networth do you want allocated to real estate (real and REIT)? You currently have $3.6 million + personal home(s?) in real estate.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
wickywack
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Joined: Thu Jun 11, 2015 8:09 am

Re: Is switching 529 plans worth it?

Post by wickywack »

shareenmd wrote: Sat Aug 08, 2020 7:40 am Last night I terminated the relationship with my advisor (thanks to the teaching on this site and White Coat Investor!). I need advice on the following:

1. I initiated the transfer of accounts from TDAmeritrate Institutional to Vanguard. The Vanguard rep told me there may be a fee to sell the DFA funds at Vanguard. Any way to avoid this? The advisor had me in about 15 of these funds so if they charge $50 per fund it will add up.
It's $20 online. Less - potentially free - depending on how many total assets you are transferring over. See:

https://investor.vanguard.com/investing ... tual-funds
shareenmd wrote: Sat Aug 08, 2020 7:40 am
2. I have 4 children, each with a 529 plan. My kids are 17, 15, 15, 11. The 3 older kids have 529 with American Funds and the youngest has the Utah plan. I have read that the American Funds have some of the highest fees. Is it worth switching the other 3 plans to Utah or another one with lower fees? I was thinking that it may not be worth it because we will start using the money for my son (Senior in high school) soon but actually he will have free tuition here in Florida due to Bright Futures scholarship. My twin 15 year olds will also likely get this scholarship. So, there is a good chance that there will be money in these accounts for years to come.
FWIW, 529s count toward total asset status above. Vanguard has its 529 (via Nevada). It's a pretty good plan, though I think Utah is on par. I just rolled over pricey 529s from an advisor to Vanguard earlier this year - it was a pretty easy process.
shareenmd wrote: Sat Aug 08, 2020 7:40 am 3. After reading extensively on this site and WCI I have a good idea about how to set up my asset allocation once the funds settle in Vanguard. I was planning to put approx 10% of funds into a REIT (probably in our Roth accounts). My husband and I are just finishing construction on a large medical office building which will house my practice. In addition, we will be renting out the rest of the building. We put about $600,000 of our personal money into the project and we will owe just over $3million. Would you decrease the % invested in REIT to take into account the significant amount of money we have invested in our building?
I invest (tilt) in a REIT fund, but I don't have other real estate (beyond a house). If I did, I personally would drop the REIT - I wouldn't do both. Note that a total market fund already holds REITs, so consider if you really want more than market weight.
psy1
Posts: 216
Joined: Thu Jan 31, 2019 1:40 am

Re: Is switching 529 plans worth it?

Post by psy1 »

I am not a big fan of 529 accounts having invested quite a bit money in one. I over-invested which is generally a good problem to have. My chief complaint is that plan rules limit changes in investments to just two trades per year. That is ridiculous and nonsensical. In the next six months, I anticipate doing a total non-qualified withdrawal and paying the capital gains taxes and penalties just to get out of it. Conventional wisdom is to leave money in the account for future grandchildren. But I don't want to be irritated for the next 20 years.
Outer Marker
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Re: Is switching 529 plans worth it?

Post by Outer Marker »

IMO you have too much real estate exposure. Absolutely no need to go over market rate in REITS in your portfolio. (REITS are already included in Total Stock Market and S&P 500).
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Stinky
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Re: Is switching 529 plans worth it?

Post by Stinky »

shareenmd wrote: Sat Aug 08, 2020 7:40 am Last night I terminated the relationship with my advisor (thanks to the teaching on this site and White Coat Investor!).

Congratulations on firing your advisor! That’s a big deal!

I need advice on the following:

1. I initiated the transfer of accounts from TDAmeritrate Institutional to Vanguard. The Vanguard rep told me there may be a fee to sell the DFA funds at Vanguard. Any way to avoid this? The advisor had me in about 15 of these funds so if they charge $50 per fund it will add up.

Can you sell the funds at TDA for a lesser or no fee?

2. I have 4 children, each with a 529 plan. My kids are 17, 15, 15, 11. The 3 older kids have 529 with American Funds and the youngest has the Utah plan. I have read that the American Funds have some of the highest fees. Is it worth switching the other 3 plans to Utah or another one with lower fees? I was thinking that it may not be worth it because we will start using the money for my son (Senior in high school) soon but actually he will have free tuition here in Florida due to Bright Futures scholarship. My twin 15 year olds will also likely get this scholarship. So, there is a good chance that there will be money in these accounts for years to come.

Since you’ll have money in these accounts “for years to come”, and maybe for grandkids if your children don’t fully use them, why not spend a little time now to transition into a better 529 plan.

3. After reading extensively on this site and WCI I have a good idea about how to set up my asset allocation once the funds settle in Vanguard. I was planning to put approx 10% of funds into a REIT (probably in our Roth accounts). My husband and I are just finishing construction on a large medical office building which will house my practice. In addition, we will be renting out the rest of the building. We put about $600,000 of our personal money into the project and we will owe just over $3million. Would you decrease the % invested in REIT to take into account the significant amount of money we have invested in our building?

I wouldn’t invest in a stand alone REIT.

Thank you in advance for your time! Any other suggestions (as I transition to DIY) would be much appreciated.
Once again, congratulations on taking control of your own finances.
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Lastrun
Posts: 342
Joined: Wed May 03, 2017 6:46 pm

Re: Is switching 529 plans worth it?

Post by Lastrun »

shareenmd wrote: Sat Aug 08, 2020 7:40 am Would you decrease the % invested in REIT to take into account the significant amount of money we have invested in our building?
Yes, at least for me:

1. About a third of my net worth is in commercial real estate,
2. I also own a nice home mostly paid for,
3. I have a large long position in the Vanguard Total Stock Fund which has REITs at market weight,

So I own no separate REITs or REIT funds.

Also, I moved our daughter's 529 Plan from American Funds to Vanguard and it went smoothly.
Topic Author
shareenmd
Posts: 33
Joined: Sun Jun 07, 2020 4:08 pm

Re: Is switching 529 plans worth it?

Post by shareenmd »

Do you remember how long it took for 529 funds to settle in Vanguard? I did the transfer from American Funds to Vanguard about 10 days ago. Both American Funds and Vanguard show $0 in the 529s so I'm assuming it's in the process but seems like a long time.
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