Author Topic: Georgia 529 or Vanguard 529 ?  (Read 4049 times)

abongiov

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Georgia 529 or Vanguard 529 ?
« on: January 12, 2014, 08:04:26 AM »
Hi,

I am trying to figure out the best 529 plan for my kids.
Apparently I can deduct $2000/year on my Georgia State Tax if I use the Georgia 529.
The Expense ratio difference between Vanguard and Georgia is as follow:       
                                           Vanguard           Georgia
Age-based options               0.21%            0.34%-0.41%
Static/individual options   0.21%0.50%   0.00%-0.40%

Other difference is that Georgia only has 5 Individual portfolios and Vanguard 19.
Should I put all in Georgia 529 or just $2000/year and any additional in Vanguard one  ?

Thank you for your help

Zamboni

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Re: Georgia 529 or Vanguard 529 ?
« Reply #1 on: January 12, 2014, 08:40:01 AM »
^I did the last thing you suggested (maxed out the amount in the state account that is tax deductible and put the rest in Vanguard.)  But now the state legislature has cancelled that tax loophole, so I'm going to consolidate them both into Vanguard. 

savingtofreedom

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Re: Georgia 529 or Vanguard 529 ?
« Reply #2 on: January 12, 2014, 09:38:46 AM »
bummer - I was wondering this as we have a little one on the way - so is there now no tax benefit for a 529 in GA? 

Zamboni

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Re: Georgia 529 or Vanguard 529 ?
« Reply #3 on: January 12, 2014, 09:42:20 AM »
Oh, sorry!  The way my post reads is misleading.  I'm in NC; not sure what is happening in GA legislature.  Be sure to double check, though, before you set up a 529 in state.  State laws can change quickly.

savingtofreedom

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Re: Georgia 529 or Vanguard 529 ?
« Reply #4 on: January 12, 2014, 09:56:49 AM »
just googled it - sometimes i shouldn't be so lazy:

All Georgia taxpayers may now contribute and deduct up to $2,000 each year on behalf of any beneficiary regardless of their annual income. Georgia taxpayers are not required to itemize deductions to make this adjustment to income. Please note that a transfer of funds from another state's 529 plan is not eligible for the Georgia income tax deduction. Georgia tax forms refer to the Path2College 529 Plan as the "Georgia Higher Education Savings Plan" (GHESP); the Path2College 529 Plan is established by the GHESP.

Contributions made during the tax year, or before the following year's federal tax filing deadline are eligible for the deduction. State tax benefits offered in connection with the Path2College 529 Plan are available only to Georgia taxpayers. You should consult with a qualified tax advisor regarding the application of Georgia state tax benefits to your particular circumstances. Recapture provisions apply. See the Disclosure Booklet for details.

I am thinking it would make the most sense to utilize the tax benefit of the 529 and dump the rest in Vanguard.  Unless my kid is some genius that gets full rides out of state I am pushing for hope.  Georgia Tech and GA are both great schools.  My husband and I went to GT on hope and I had additional scholarships and was pretty much close to paid to go to college. 

NicM

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Re: Georgia 529 or Vanguard 529 ?
« Reply #5 on: January 12, 2014, 04:31:15 PM »
Was a Cowetan, now I'm not. Still trying to determine if I move the funds out of GA 529 will I owe taxes? Just stick with Vanguard. That's where their funds are going (and growing) now. That is, unless you never, ever intend to leave the Peach state... Which, y'all know I didn't plan to do, but then life happens, bless our hearts :)

msilenus

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Re: Georgia 529 or Vanguard 529 ?
« Reply #6 on: January 12, 2014, 07:40:06 PM »
Should I put all in Georgia 529 or just $2000/year and any additional in Vanguard one  ?

I'm pretty sure this is optimal answer, by the numbers, and ignoring plan options and their effect on asset allocation strategies.  I just played around in a spread sheet a bit, and after 18 years, with 5% return, and the expense ratios above, a $2120 contribution split between Georgia ($2000) and Vanguard ($120) beat a $2000 contribution to Vanguard by 5.6%.  The increased fees only ate away .4% of the 6% tax benefit.

Of course, run the numbers yourself, and there's something to be said for simplicity (ie: one account) but I think that's what the numbers say.