Best Mustachian 529 Options For Grandbaby?

[Dicey]

If this has been covered elsewhere, please feel free to point me to another thread.

Our grandbaby is going to turn one very soon. We don't want to buy any stupid plastic stuff, so we're thinking we'll open a 529 for her first birthday present. Her mommy is wise with money, but her daddy has a live-for-the-moment approach, which we don't want to feed.

We live in CA, kids & grandbaby live in CO. We know zero about 529's, so any mustachian input is appreciated. We're thinking of opening it with $1000 to start, but could go more if there's a great program that has a higher threshold.

I know there's a ton of info out on the internet, but I care more about what the most mustachian choices are. We have no idea where she'll go to school, so portability is important.

Thanks!

[VeggieTable]

This is the website I used: http://www.savingforcollege.com/college_savings_101/

I'm pretty sure I read about it on this forum a while back. It has a ton of info. Based on my research there and other places, I decided on a 529 sponsored by the state of Utah (I live in GA). Very low fees & a large selection of funds.

[Paul der Krake]

California has a great, low-cost 529 with portfolio options as cheap as 8 basis points.

[newton]

I invested in the Utah plan about 10 years ago.  My child is just needing the money now.  Overall it's been great.  I don't live in UT but decided to invest based on the fact there was no benefit to me to invest in the state I live in and at the time the Utah plan was praised for low fees. 

[HPstache]

I am in WA where there is a failing 529 plan and no state income tax advantages.  I second Utah's plan... that's what inchoate for DS2 and DS0

[Dee18]

My DD is in college now and using funds from the Utah 529 my father set up for her 15 years ago.  The Utah program makes it very easy to handle the disbursements and has been great at answering questions along the way.  Our own state did not have any tax benefits for 529 accounts; that is worth considering in your choice of providers.

[Dicey]

Thanks for all the tips so far. As to tax benefits, since we're the grandparents, they wouldn't apply even if my state offered any, riiiight?

[caracarn]

The Ohio plan is regularly ranked as one of the best in the country and is simple and low fee.  I used it before I moved here and then when I moved here was able to take advantage of state tax breaks.

Regarding the tax breaks in general, you'd need to look at the plan in question, but most will still have federal benefits that are available but most of those would be for the beneficiary (such as not paying taxes on the growth when using the money for qualified expenses).  Also be careful that the plan does not lock you in to going to schools in that state.  IL does that with some of their options for example (not that anyone would want to invest in their 529 now given the financial mess of the state).  If you do not want to lock in your grandchild to only being able to use the money in certain locations just keep that in mind and check out the details.

[TVRodriguez]

I set up 529s for my nephews ages ago (~15 years ago), and at the time the lowest cost plan was through Iowa/Vanguard.  I have yet to take any money out.  I have no state income tax so that is not an issue for me.  I've since set up 529s through NY's Vanguard plan for my own kids.

[Paul der Krake]

Thanks for all the tips so far. As to tax benefits, since we're the grandparents, they wouldn't apply even if my state offered any, riiiight?

If you owned the account, participated AND lived in a state where there is a tax deduction (say, your northern neighbor Oregon), you definitely could claim the deduction.

It's not as clear cut if you contribute to an account owned by someone else (usually the parents), some states will allow the deduction, some don't. Some states have very complex provisions, so make sure to read the fine print.