529 Plans

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
Isabelle77
Posts: 958
Joined: Thu Dec 17, 2015 12:43 pm

529 Plans

Post by Isabelle77 »

Treading carefully here in order to avoid discussing proposed legislation.

We live in Washington state (no state income tax ) and have Vanguard 529s for our two children. I know that multiple 529s are allowed but does anyone know if I could open a second 529 with Vanguard for each child? I'd like to keep private high school savings and college savings separate. Or is there another plan that bogleheads would recommend for a second 529?
letsgobobby
Posts: 12073
Joined: Fri Sep 18, 2009 1:10 am

Re: 529 Plans

Post by letsgobobby »

Deleted
Last edited by letsgobobby on Fri Aug 02, 2019 11:56 pm, edited 1 time in total.
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Re: 529 Plans

Post by mhalley »

I see no reason you couldn’t open more than 1 529 plan with Vanguard. You could check out the Clark Howard deans list with high honors, then compare them to the Nevada plan. Surprised Nevada not getting high honors, but looks like it only has 4.5 graduating caps vs 5 for California for example at savingforcollege.com
http://clark.com/education/clarks-529-plan-guide/

http://www.savingforcollege.com/compare_529_plans/
Last edited by mhalley on Sat Dec 16, 2017 1:44 pm, edited 1 time in total.
Topic Author
Isabelle77
Posts: 958
Joined: Thu Dec 17, 2015 12:43 pm

Re: 529 Plans

Post by Isabelle77 »

letsgobobby wrote: Sat Dec 16, 2017 1:30 pm
Isabelle77 wrote: Sat Dec 16, 2017 11:52 am Treading carefully here in order to avoid discussing proposed legislation.

We live in Washington state (no state income tax ) and have Vanguard 529s for our two children. I know that multiple 529s are allowed but does anyone know if I could open a second 529 with Vanguard for each child? I'd like to keep private high school savings and college savings separate. Or is there another plan that bogleheads would recommend for a second 529?
What do you think about the WA GET prepaid plan?

We also use UT, NY, and NV.
Honestly, I'd never considered it. It was frozen a few years ago and since then they've actually cut in-state tuition. We started our 529s before we lived here and their performance has been good.

I'm more interested in starting separate 529s for high school tuition and wondering if I can do that with Vanguard even though we already have other 529s with them. This may be a discussion for the end of next week though, I don't want to break forum rules.
User avatar
The529guy
Posts: 610
Joined: Fri May 23, 2014 1:08 am

Re: 529 Plans

Post by The529guy »

Isabelle77 wrote: Sat Dec 16, 2017 11:52 amI know that multiple 529s are allowed but does anyone know if I could open a second 529 with Vanguard for each child? I'd like to keep private high school savings and college savings separate.
Private high school tuition is not an eligible educational expense for 529 plan distributions. 529 plans are for post-secondary education.

I highly recommend reading IRS Pub 970. If you’re looking for a tax-sheltered savings plan for K-12 tuition, you will need to look at Coverdell ESAs, which Vanguard does not offer.
Topic Author
Isabelle77
Posts: 958
Joined: Thu Dec 17, 2015 12:43 pm

Re: 529 Plans

Post by Isabelle77 »

The529guy wrote: Sat Dec 16, 2017 2:46 pm
Isabelle77 wrote: Sat Dec 16, 2017 11:52 amI know that multiple 529s are allowed but does anyone know if I could open a second 529 with Vanguard for each child? I'd like to keep private high school savings and college savings separate.
Private high school tuition is not an eligible educational expense for 529 plan distributions. 529 plans are for post-secondary education.

I highly recommend reading IRS Pub 970. If you’re looking for a tax-sheltered savings plan for K-12 tuition, you will need to look at Coverdell ESAs, which Vanguard does not offer.
Well it isn’t eligible TODAY but in 2 weeks...

We’re not eligible for ESAs unfortunately.
Spooky
Posts: 142
Joined: Mon Apr 04, 2011 11:00 am

Re: 529 Plans

Post by Spooky »

If your income is too high for an ESA, you can contribute to a UTMA then transfer into ESA. Or have someone else contribute.

Unfortunately the contribution limits are relatively low, and their future is uncertain.
Topic Author
Isabelle77
Posts: 958
Joined: Thu Dec 17, 2015 12:43 pm

Re: 529 Plans

Post by Isabelle77 »

Spooky wrote: Sat Dec 16, 2017 3:16 pm If your income is too high for an ESA, you can contribute to a UTMA then transfer into ESA. Or have someone else contribute.

Unfortunately the contribution limits are relatively low, and their future is uncertain.
But why if 529s are going to be allowed for k-12?
User avatar
The529guy
Posts: 610
Joined: Fri May 23, 2014 1:08 am

Re: 529 Plans

Post by The529guy »

Isabelle77 wrote: Sat Dec 16, 2017 3:10 pm
The529guy wrote: Sat Dec 16, 2017 2:46 pm
Isabelle77 wrote: Sat Dec 16, 2017 11:52 amI know that multiple 529s are allowed but does anyone know if I could open a second 529 with Vanguard for each child? I'd like to keep private high school savings and college savings separate.
Private high school tuition is not an eligible educational expense for 529 plan distributions. 529 plans are for post-secondary education.

I highly recommend reading IRS Pub 970. If you’re looking for a tax-sheltered savings plan for K-12 tuition, you will need to look at Coverdell ESAs, which Vanguard does not offer.
Well it isn’t eligible TODAY but in 2 weeks...

We’re not eligible for ESAs unfortunately.
Sorry, I was not aware a change was being considered. Now I understand your original caveat.

I should change my username.
letsgobobby
Posts: 12073
Joined: Fri Sep 18, 2009 1:10 am

Re: 529 Plans

Post by letsgobobby »

Deleted
Last edited by letsgobobby on Fri Aug 02, 2019 11:56 pm, edited 1 time in total.
cwp
Posts: 1
Joined: Sat Dec 30, 2017 1:01 pm

Re: 529 Plans

Post by cwp »

I have essentially the same question. I have 3 children that each have 529 plans at Vanguard (moderately aggressive-age adjusted plans) that I intend to use for college/graduate school expenses.

With the new tax law, I'm interested in opening a second 529 plan to pay for private school (K-12) in Alabama where we live. It's my understanding that a child can have multiple 529 plans. I probably should have originally put the money in the Alabama 529 plan, although I didn't live here when these were started.

I'm curious if I am able to fund an Alabama 529 plan for their tuition ( which costs roughly $15,000/year/child). I think the maximum that can be withdrawn is $10,000/year. So, if I funded one of these with $10,000 in something like the Prime money market account, could I take the state tax deduction (5%, $500) and use that $10,000 a few months later to pay tuition without a penalty? It doesn't seem right??
CppCoder
Posts: 921
Joined: Sat Jan 23, 2016 8:16 pm

Re: 529 Plans

Post by CppCoder »

cwp wrote: Sat Dec 30, 2017 1:11 pm I have essentially the same question. I have 3 children that each have 529 plans at Vanguard (moderately aggressive-age adjusted plans) that I intend to use for college/graduate school expenses.

With the new tax law, I'm interested in opening a second 529 plan to pay for private school (K-12) in Alabama where we live. It's my understanding that a child can have multiple 529 plans. I probably should have originally put the money in the Alabama 529 plan, although I didn't live here when these were started.

I'm curious if I am able to fund an Alabama 529 plan for their tuition ( which costs roughly $15,000/year/child). I think the maximum that can be withdrawn is $10,000/year. So, if I funded one of these with $10,000 in something like the Prime money market account, could I take the state tax deduction (5%, $500) and use that $10,000 a few months later to pay tuition without a penalty? It doesn't seem right??
That's my understanding of the new tax law. I think it doesn't seem right because this was never the intent of the original law (my interpretation, I suppose). The federal law has now changed to the detriment of the state tax system. it will be interesting to see if states choose to "fix" this problem with new laws on deductibility.
Post Reply