Author Topic: Anyone here have a 529 plan in California?  (Read 1993 times)

jeromedawg

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Anyone here have a 529 plan in California?
« on: February 22, 2016, 07:45:19 PM »
Just wondering if there's much benefit in having one. I opened one for my son and just put $2500 in it. Are the gains taxable as well as deductible?

Urchina

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Re: Anyone here have a 529 plan in California?
« Reply #1 on: February 22, 2016, 09:49:20 PM »
We are using the Scholarshare 529 for California. As I understand it, the distributions (including gains) are exempt from federal tax when taken out and used for qualified educational expenses, which may include tuition, room, board, books, fees, computers and other technology, etc. 


trashmanz

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Re: Anyone here have a 529 plan in California?
« Reply #2 on: February 22, 2016, 11:10:30 PM »
I have one under vanguard and I'm in California. I regret the decision but who knows what I will feel later on when college comes around.

CanuckExpat

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Re: Anyone here have a 529 plan in California?
« Reply #3 on: February 23, 2016, 12:01:33 AM »
I live in California, we have some money in a Utah 529 plan.
California currently has no state tax deduction for contributions; there is no federal deduction.

The advantages for having money in a 529 is tax free growth if used for educational purposes; however, there are other ways to achieve similar results without the worry about "over contributing" to a 529.

We opened the 529 because we had no other tax advantaged space to fill, we were only putting in relatively "small amount of money", and didn't mind earmarking a bit specifically for college savings (knowing we could raid it if needed).

529 or regular index account to save for college?
Morningstar Top 529 College Savings Plan Rankings 2015
529 Plan Account as a Tax Shelter


coolistdude

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Re: Anyone here have a 529 plan in California?
« Reply #4 on: February 23, 2016, 09:28:43 AM »
I have one under vanguard and I'm in California. I regret the decision but who knows what I will feel later on when college comes around.

Why do you regret your decision? I'm considering opening up a 529 and I live in CA so that's why I'm curious.

BigRed

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Re: Anyone here have a 529 plan in California?
« Reply #5 on: February 23, 2016, 09:35:26 AM »
We live in California and have one for each kid in Nevada with Vanguard.

jeromedawg

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Re: Anyone here have a 529 plan in California?
« Reply #6 on: February 23, 2016, 09:42:39 AM »
Curious regarding those who opened 529s in other states. Presumably tax deductible? How does that all work? E.g. where did you go to open the accounts and do you have to end up filing taxes for the particular state you opened the account in, etc?

CanuckExpat

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Re: Anyone here have a 529 plan in California?
« Reply #7 on: February 23, 2016, 10:44:36 AM »
Curious regarding those who opened 529s in other states. Presumably tax deductible? How does that all work? E.g. where did you go to open the accounts and do you have to end up filing taxes for the particular state you opened the account in, etc?

If you live in California, you are not going to get a state (nor federal) tax deduction, no matter what state you open the 529 with.
So no, you don't have to file taxes in any other state.

People, like me, open up a 529 in other states because we like the investment options better: lower fees, better investment choices, etc. Read the article I linked earlier about best 529 plans.

If you live in a state like California which has no state tax deduction, there is no advantage to open a plan with your own state, so you are free to the choose the best one nation-wide (or not open one at all). If you are not getting a state tax deduction, the case for opening a 529 is limited, IMO.