Best 529 plans out there?

[zizijeanmaire]

Hi all,
Looking to start a 529 plan for future children. My understanding was you could open one up from any state (I'm not in a state that requires you to use its plan), and I've heard Vanguard has one. Any advice on ones you've used/liked/special perks?

Thanks!

[seattlecyclone]

I go with the Vanguard plan because the expense ratios are low I can use the same login I already use for most of the rest of my investments. I think if you're chasing the absolute lowest fees the California plan was a touch lower last I looked, but I find the convenience of not having yet another financial institution to deal with to be worth a couple of basis points.

[J.R. Ewing]

I did a bunch of research last December and ended up with Wisconsin's Edvest plan.  It had IMHO  the best combination of fees, investment options, and ease of use. 

Cheers

[Buffaloski Boris]

The bigger question IMHO: does your state offer a state income deduction for contributions? If so, using another states plan could be penny wise and dollar foolish.

[A Fella from Stella]

I like the Virginia plan. Most people will just say, though, use the one in your state if there's income tax where you live.

[chemistk]

I use my current state's plan (PA). The fees aren't terrible and the investment options are halfway decent, if only a narrowish slice of what's actually available.

The two biggest benefits for me: 1) it's administered by Vanguard and 2) I get to claim the contributions on my state taxes which has resulted in a small state tax refund every year since I've had the 529 open.

[MrUpwardlyMobile]

I go with the Vanguard plan because the expense ratios are low I can use the same login I already use for most of the rest of my investments. I think if you're chasing the absolute lowest fees the California plan was a touch lower last I looked, but I find the convenience of not having yet another financial institution to deal with to be worth a couple of basis points.

I think New York has one of the best direct plans.  If you’re a New Yorker, you’re crazy not to use it.  Low fee investing because New York uses vanguard. It has a respectable tax deduction too.

[A Fella from Stella]

I go with the Vanguard plan because the expense ratios are low I can use the same login I already use for most of the rest of my investments. I think if you're chasing the absolute lowest fees the California plan was a touch lower last I looked, but I find the convenience of not having yet another financial institution to deal with to be worth a couple of basis points.

I think New York has one of the best direct plans.  If you’re a New Yorker, you’re crazy not to use it.  Low fee investing because New York uses vanguard. It has a respectable tax deduction too.

I ended up avoiding the NY plan because it's run by Chase, and I just hate them so much.

Perhaps I need to bite the bullet with the next kid, take the deduction and get the plan going.

[HPstache]

I like the Utah 529.  Vanguard Funds, nice website.

[Paul der Krake]

California has the lowest combined costs if you stick to the one-fund portfolio, just 0.08% for the total stock market option.

But it's unlikely to make a large difference because there are plenty of other options in the 0.1-0.3% range.

[MrUpwardlyMobile]

I go with the Vanguard plan because the expense ratios are low I can use the same login I already use for most of the rest of my investments. I think if you're chasing the absolute lowest fees the California plan was a touch lower last I looked, but I find the convenience of not having yet another financial institution to deal with to be worth a couple of basis points.

I think New York has one of the best direct plans.  If you’re a New Yorker, you’re crazy not to use it.  Low fee investing because New York uses vanguard. It has a respectable tax deduction too.

I ended up avoiding the NY plan because it's run by Chase, and I just hate them so much.

Perhaps I need to bite the bullet with the next kid, take the deduction and get the plan going.

What are you talking about?  The NY plan has been managed by Vanguard for over a decade.

https://www.nysaves.org/home/why-ny-529-direct-plan/vanguard-ascensus.html

Yeah, NY using Vanguard and having a healthy tax deduction has long been a major incentive for New Yorkers to use the direct plan.

[A Fella from Stella]

I go with the Vanguard plan because the expense ratios are low I can use the same login I already use for most of the rest of my investments. I think if you're chasing the absolute lowest fees the California plan was a touch lower last I looked, but I find the convenience of not having yet another financial institution to deal with to be worth a couple of basis points.

I think New York has one of the best direct plans.  If you’re a New Yorker, you’re crazy not to use it.  Low fee investing because New York uses vanguard. It has a respectable tax deduction too.

I ended up avoiding the NY plan because it's run by Chase, and I just hate them so much.

Perhaps I need to bite the bullet with the next kid, take the deduction and get the plan going.

What are you talking about?  The NY plan has been managed by Vanguard for over a decade.

https://www.nysaves.org/home/why-ny-529-direct-plan/vanguard-ascensus.html

Yeah, NY using Vanguard and having a healthy tax deduction has long been a major incentive for New Yorkers to use the direct plan.

What what what!

Yet again, I find out I'm a moron!

Thanks, dudes.

[jeninco]

I like the Virginia plan. Most people will just say, though, use the one in your state if there's income tax where you live.

As someone with a kid that's trying to pull from a VA 529, I'd say they suck. The web interface is terrible, and they're enormously understaffed, so much that trying to have a conversation with an actual person will take days.  Also, we filed all the forms they need (in paper: the site was that bad) and it's entirely unclear when the $ will head over to the kid's school.

Fortunately, we have another 529 plan too, so we'll pull the first semester's tuition (due in July) from there, and then chase down VA before the second semester fees are due.

[Annie101]

We also use Utah (and live in another state).  Recently read a great blog post on saving for college (or not) and it listed the three best state 529 plans.  Utah was one of them.  Can't remember where I saw it, maybe on jlcollins?  It was from a guest writer.

[jeninco]

I like the Virginia plan. Most people will just say, though, use the one in your state if there's income tax where you live.

As someone with a kid that's trying to pull from a VA 529, I'd say they suck. The web interface is terrible, and they're enormously understaffed, so much that trying to have a conversation with an actual person will take days.  Also, we filed all the forms they need (in paper: the site was that bad) and it's entirely unclear when the $ will head over to the kid's school.

Fortunately, we have another 529 plan too, so we'll pull the first semester's tuition (due in July) from there, and then chase down VA before the second semester fees are due.

You should be able to have the money disbursed directly to you, and then pay the school fees from that.  That is how I deal with our NY plan, anyway.  I just print out a copy of the tuition bill + any other expenses (textbook receipts, deposits to DS's meal card, etc) and match to the withdrawal slips before I file.  If the plan is really incompetent it might be better to be sure you are handling the payments to the university yourself to avoid any late fees, etc.

Thanks for the suggestions! We're good for the first payment, and I have someone in the finance office who can help me chase down whatever we need -- thank dog for small schools.

[debittogether]

I'm in Illinois now,  but we plan to leave here well in advance of my child ever reaching college age.   Can I transfer that 529 to our new state when that happens,  or open a second and stop contributions in the first?

Any thoughts on grandparents opening 529s for their grandchildren?

I'm new to this and honestly don't want to set aside hundreds of thousands of dollars for a university degree,  but here we are in America.

[seattlecyclone]

Any thoughts on grandparents opening 529s for their grandchildren?

The FAFSA treats grandparent-owned 529s differently from parent-owned 529s. Parent-owned 529s count as a parental asset and figure into the formula the same way as your taxable mutual fund portfolio might. Grandparent-owned 529s don't count as an asset anywhere, but if you get a distribution from this account you have to report it under student income. That's assessed at a pretty high rate toward your EFC. For this reason, a common practice is for a parental 529 to be depleted earlier on in college, while it's better to tap into grandparent-owned 529s toward the end when you won't be submitting another FAFSA after that.

[Annie101]

Any thoughts on grandparents opening 529s for their grandchildren?

The FAFSA treats grandparent-owned 529s differently from parent-owned 529s. Parent-owned 529s count as a parental asset and figure into the formula the same way as your taxable mutual fund portfolio might. Grandparent-owned 529s don't count as an asset anywhere, but if you get a distribution from this account you have to report it under student income. That's assessed at a pretty high rate toward your EFC. For this reason, a common practice is for a parental 529 to be depleted earlier on in college, while it's better to tap into grandparent-owned 529s toward the end when you won't be submitting another FAFSA after that.

You can open the 529 and the grandparents can contribute directly to it.  It's pretty easy to do.

[EricEng]

What state has the lowest admin fee?  I'd love to roll over my 529 to a state with lower fees.  Ameritrade goes through Omaha and charges like .7% between state and Ameritrade cut.

[FireKingGreen]

I chose the Utah 529 plan after seeing it consistently ranked as one of the top choices. It was ridiculously easy to open and I was able to set up a recurring auto bill pay into the account from my online banking. I was also able to share a gift website link to the grandparents if they would rather go that route instead of a check for random contributions.