Any 529 funds allow picking funds?

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Sublimelaxer
Posts: 10
Joined: Thu Oct 26, 2017 11:35 am

Any 529 funds allow picking funds?

Post by Sublimelaxer »

Looking to set up 529 plan for kiddo we are welcoming in the near future. Many of the plans I have looked at only offer aggressive portfolio”, “moderate portfolio”, “age based” etc. Are there any funds that allow purchase of VTI or similar funds?

Performance of these funds seem to underperform a three fund portfolio over course of 15-18 years.

Am I better off splitting between a brokerage fund and 529 to get some tax benefit even if I can get higher return in future.

Age: 31/29 at time of baby’s birth
State of residence: Colorado
Federal Tax Rate: 24%-32% brackets depending on commissions/bonuses (both in highly bonused positions) married filing jointly
State tax rate: 4.63%

Debts:
Revolving credit cards paid to $0 monthly

Assets:
Retirement: 2.5X income
Inherited IRA: 1x income
Brokerage account: 1.8x income
House: paid off
mhalley
Posts: 8694
Joined: Tue Nov 20, 2007 6:02 am

Re: Any 529 funds allow picking funds?

Post by mhalley »

Does Vanguards Nevada plan not do that?
https://investor.vanguard.com/529-plan/ ... nd-returns
Want a more hands-on approach to investing? Design and manage your own investment strategy by choosing up to 5 of 20 of our individual portfolios. As college and other education goals get closer, you decide how and when to rebalance your investments.
Grt2bOutdoors
Posts: 23245
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Any 529 funds allow picking funds?

Post by Grt2bOutdoors »

Try the Utah plan - my529.org
NY529DirectPlan - nysaves.org
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
is50xenough
Posts: 167
Joined: Sat Jul 28, 2018 1:37 pm

Re: Any 529 funds allow picking funds?

Post by is50xenough »

Sublimelaxer wrote: Wed Jan 13, 2021 9:00 am Looking to set up 529 plan for kiddo we are welcoming in the near future. Many of the plans I have looked at only offer aggressive portfolio”, “moderate portfolio”, “age based” etc. Are there any funds that allow purchase of VTI or similar funds?

Performance of these funds seem to underperform a three fund portfolio over course of 15-18 years.

Am I better off splitting between a brokerage fund and 529 to get some tax benefit even if I can get higher return in future.

Age: 31/29 at time of baby’s birth
State of residence: Colorado
Federal Tax Rate: 24%-32% brackets depending on commissions/bonuses (both in highly bonused positions) married filing jointly
State tax rate: 4.63%

Debts:
Revolving credit cards paid to $0 monthly

Assets:
Retirement: 2.5X income
Inherited IRA: 1x income
Brokerage account: 1.8x income
House: paid off
Utah and iowa do. I wonder if just have to look around and somewhere there is button for “pick your own” but label might not be so clear.
informal guide
Posts: 373
Joined: Mon Aug 29, 2016 10:26 am

Re: Any 529 funds allow picking funds?

Post by informal guide »

As a Colorado taxpayer and resident, Colorado's Direct Portfolio College Savings Plan (and other Colorado 529 plans) offer unlimited CO state income tax deductibility for contributions. What that means is that you save 4.63% of your contributions in the form of lower CO state income taxes. In other words, a $10,000 contribution reduces your Colorado income tax bill by $463. Here's a link to information on the plan from savingforcollege.com:

https://www.savingforcollege.com/529-pl ... vings-plan

As you consider 529 plans, you should weigh this state tax savings against your desire to customize your portfolio in other state 529 plans. Also, as you look at the investment options, do "drill down" on the 529 plan portfolios. For example, CO's "Aggressive Growth Portfolio" is 60% Vanguard Total Stock Market Fund and 40% Vanguard Total International Stock Fund, Total expenses, including both underlying fund expenses and CollegeInvest expenses are 0.32% annually - - some very low cost plans are 0.15% but many plans have significantly higher expenses.

Enjoy your upcoming parenthood!
Pandemic Bangs
Posts: 375
Joined: Sat Dec 26, 2020 3:49 pm

Re: Any 529 funds allow picking funds?

Post by Pandemic Bangs »

See this very recent thread:

viewtopic.php?f=1&t=335824
Wait 'til I get my money right | Then you can't tell me nothing, right?
Nebraska_Drought
Posts: 21
Joined: Fri Nov 13, 2020 11:19 am

Re: Any 529 funds allow picking funds?

Post by Nebraska_Drought »

Nebraska's plan allows for the picking of individual funds, mostly from Vanguard:

https://nest529.com/
billfromct
Posts: 1176
Joined: Tue Dec 03, 2013 9:05 am

Re: Any 529 funds allow picking funds?

Post by billfromct »

The Colorado 529 plan has 2 individual direct stock mutual funds, the Stock Index Portfolio, which is the Vanguard Total Stock Market Index (expense ratio .32%?) and Aggressive Growth Portfolio (expense ratio .32%) which is 60% Vanguard Total Stock Market Index & 40% Vanguard International Stock Market Index.

I think there is a $20 annual account fee.

The website is very clunky & confusing to navigate.

It appears that all contributions to the Colorado 529 plan are Colorado state tax deductible. You may want to google “are contributions to the Colorado 529 plan tax deductible”. I don’t know why you wouldn’t contribute to the Colorado 529 plan when the state allows such a great tax incentive to put money in the state plan.

bill
Last edited by billfromct on Wed Jan 13, 2021 2:49 pm, edited 1 time in total.
jj45
Posts: 93
Joined: Tue Jan 02, 2018 4:02 pm

Re: Any 529 funds allow picking funds?

Post by jj45 »

As a Colorado resident, the state income tax deduction is a nice bonus. While you can't pick whatever funds you like, the Direct Portfolio has several non-age-based options, all in Vanguard funds. You can see the detailed fund choices and allocations at https://cdn.unite529.com/jcdn/files/PDF ... losure.pdf They are not three-fund portfolios of US stocks, Int'l stocks, and US bonds, they also include Int'l bonds to make a four-fund portfolio. There are several asset allocation options. The expenses are a bit higher than buying the funds directly but I don't think that offsets the 4.65% income tax deduction. You could do the math and see. Unless you have strong reason to dislike including Int'l bonds, the CO plan seems like a clear choice.
stimulacra
Posts: 868
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: Any 529 funds allow picking funds?

Post by stimulacra »

I manage two different 529 accounts (Utah and Vanguard)… both allow for selections of various types of funds and asset classes. Both offer more selection than some 401k's I've been a part of.

Utah's even allows for a custom glide path or age bracket based allocation rebalance.
welldone
Posts: 67
Joined: Sun Aug 17, 2014 2:53 pm

Re: Any 529 funds allow picking funds?

Post by welldone »

Illinois's 529 allows picking individual Vanguard (and other firms) mutual funds. Most of the Vanguard funds also seem to be at cost - 0.10 expenses on Total Stock Market.

Illinois 529 also gives 5% state deduction up to $20k contribution ($1k total possible).
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