Virginia 529 plan options

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dave1054
Posts: 176
Joined: Wed Apr 01, 2009 7:50 am

Virginia 529 plan options

Post by dave1054 »

Want to open 529 plan for new grandchild. Will gift it to parents who reside in Virginia and they can get open account and get VA tax deduction.

While no one can predict what stock market will be in 18 plus years, as a rule of thumb would it be better to put in a prepaid option or put it 100% in market. One option is Vanguard Total Stock mutual with expense ratio of 12 basis points. Thank you.
mhalley
Posts: 8503
Joined: Tue Nov 20, 2007 6:02 am

Re: Virginia 529 plan options

Post by mhalley »

I think prepaid tuition plans are generally not recommended. The age based porfolio is generally a good idea, but they are a little expensive at .55 er. The static 80/20 might be a good place to start.
https://www.virginia529.com/resources/p ... ggressive/
codedude
Posts: 70
Joined: Thu Jan 26, 2017 9:15 pm

Re: Virginia 529 plan options

Post by codedude »

Prepaid comes with strings like if beneficiary goes to a private school or out of state, they just get back the original amount paid with a paltry rate of return.

Use invest 529 and not prepaid.

Full disclosure: I do own prepaid for part of my 529, bought when I did not know enough and now it is best for me to continue in it versus move out.
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munemaker
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Joined: Sat Jan 18, 2014 6:14 pm

Re: Virginia 529 plan options

Post by munemaker »

dave1054 wrote: Wed Apr 10, 2019 5:42 pm Want to open 529 plan for new grandchild. Will gift it to parents who reside in Virginia and they can get open account and get VA tax deduction.

One option is Vanguard Total Stock mutual with expense ratio of 12 basis points. Thank you.
My son lives in VA and I live in PA. My son opened a VA 529 for our grandchild (using Vanguard Total Stock Market). We make contributions directly to the plan and he can take the VA tax deduction for our contributions. Under VA regulations, it does not matter who makes the contribution, the account owner (if VA resident) is entitled to take the VA state tax deduction (read the prospectus). Not only that, but under PA regulations, we can also take a state tax deduction for any amount contributed to any 529 anywhere. So pretty weird, but we are both entitled to take the tax deduction for my contributions in our respective states of residence.

The one thing that could upset your plan is if you (living out of state) own the account and your parents who live in VA make contributions. I think (but not 100% sure) they would not be entitled to the VA state tax deduction because they are not owners of the account.
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