Vanguard vs state 529 plan

[jeam3131]

I'm looking to open a 529 plan for my child. I'm having a little trouble unstanding if there's any advantage to using my states 529 plan (Michigan, MESP) vs just using vanguard. Seems like vanguard would offer lower cost funds?

[mhalley]

In general, the only reason to use your state 529 rather than a cheaper one is if your state offers a tax deduction for using theirs. Looks like Mi does.
https://www.michigan.gov/treasury/news/ ... l%20levels.

. Individual taxpayers may deduct up to $5,000 in MESP contributions each year from their Michigan-adjusted gross income, and taxpayers filing jointly may deduct up to $10,000.

[dan7800]

NY offers the Aggressive Growth Portfolio, basically a 60/40 of VTSAX/VTIAX at .12 ER.

If your state doesn't offer a deduction, you could try NY.

[BigJohn]

In general, the only reason to use your state 529 rather than a cheaper one is if your state offers a tax deduction for using theirs. Looks like Mi does.
https://www.michigan.gov/treasury/news/ ... l%20levels.

. Individual taxpayers may deduct up to $5,000 in MESP contributions each year from their Michigan-adjusted gross income, and taxpayers filing jointly may deduct up to $10,000.

I’ve got a similar question in a different state. My state 529 site doesn’t mention it but based on this calculator from VG, it seems a state tax deduction is also available through them (Michigan also). Can anyone with a VG 529 confirm the state income tax deduction is available there?

https://vanguard.wealthmsi.com/stdc.php

[MrJedi]

In general, the only reason to use your state 529 rather than a cheaper one is if your state offers a tax deduction for using theirs. Looks like Mi does.
https://www.michigan.gov/treasury/news/ ... l%20levels.

. Individual taxpayers may deduct up to $5,000 in MESP contributions each year from their Michigan-adjusted gross income, and taxpayers filing jointly may deduct up to $10,000.

I’ve got a similar question in a different state. My state 529 site doesn’t mention it but based on this calculator from VG, it seems a state tax deduction is also available through them (Michigan also). Can anyone with a VG 529 confirm the state income tax deduction is available there?

https://vanguard.wealthmsi.com/stdc.php

It's important to note which state.

Some states require their in-state 529 program to get a deduction, some do not. I know 100% that Michigan requires the in-state 529 (MESP) to get the state tax deduction.

I looked at your link. Note that it only generically says these states have a 529 deduction, it does not say the Vanguard 529 is eligible.

[rkhusky]

This site has information about state tax deductions:
https://finaid.org/savings/state529deductions/

I saw two that said “any state plan”, Arizona and Kansas.

[MrJedi]

Also to the original question, MESP is pretty good on fees. 0.095% for a US total stock fund, 0.105% for a target date fund. AFAIK those are on the lower end of fees across the country. Trying to find something lower in fees will probably not overcome the loss of the state tax deduction if you use something else.

[cshell2]

This site has information about state tax deductions:
https://finaid.org/savings/state529deductions/

I saw two that said “any state plan”, Arizona and Kansas.

There are a few more than that. Saving for College says 9.

https://www.savingforcollege.com/articl ... ally-worth

[NiceUnparticularMan]

The PA GSP is pretty nifty, but only available to PA residents (just an example of when you might prefer a state 529).

[rkhusky]

This site has information about state tax deductions:
https://finaid.org/savings/state529deductions/

I saw two that said “any state plan”, Arizona and Kansas.

There are a few more than that. Saving for College says 9.

https://www.savingforcollege.com/articl ... ally-worth

Perhaps the finaid site is out of date. Best to check the plan’s website and/or your state’s tax return instructions.

Edit: finaid is out of date. For example, Maine reinstated its deduction last year after having no deduction for several years, and made all plans eligible, although it’s limited by income (<$200K for MFJ).

[rene]

I don’t have a state deduction but value simplicity and keep the 529 within the vanguard eco system. Worth a few basis points just for that alone.

[jeam3131]

Thanks for all the replies and insight. Looks like mesp is the way to go

[BigJohn]

In general, the only reason to use your state 529 rather than a cheaper one is if your state offers a tax deduction for using theirs. Looks like Mi does.
https://www.michigan.gov/treasury/news/ ... l%20levels.

. Individual taxpayers may deduct up to $5,000 in MESP contributions each year from their Michigan-adjusted gross income, and taxpayers filing jointly may deduct up to $10,000.

I’ve got a similar question in a different state. My state 529 site doesn’t mention it but based on this calculator from VG, it seems a state tax deduction is also available through them (Michigan also). Can anyone with a VG 529 confirm the state income tax deduction is available there?

https://vanguard.wealthmsi.com/stdc.php

It's important to note which state.

Some states require their in-state 529 program to get a deduction, some do not. I know 100% that Michigan requires the in-state 529 (MESP) to get the state tax deduction.

I looked at your link. Note that it only generically says these states have a 529 deduction, it does not say the Vanguard 529 is eligible.

Thanks for the info. The VG site sure seems to imply it’s eligible but you’re right, it sure doesn’t say VG’s account is eligible. Seems a bit like false advertising.

[bombcar]

You might not be able to get vanguard funds through your state's plan (but you might be able to) - check around and see. They may offer TIAA or similar funds with similarly low expense ratios.

Some 529s even offer incentives to open an account, so keep an eye out for those (WI has one right now with Edvest).

[dogagility]

Thanks for all the replies and insight. Looks like mesp is the way to go

agree