Vanguard 529 Investment Plans

[HillCountryHacker]

Hello all,
I am looking to open an account with Vanguard to invest in a 529 plan for my daughter. I currently have my roth IRA with vanguard tied to their total stock market index fund. I was thinking that I would tie the 529 plan to the 500 index portfolio or perhaps the total stock market portfolio both with .19 expense ratios. I have a little over a decade before my daughter would draw from the fund. I would greatly appreciate direction/recommendations regarding these or other funds available for the 529.

[ysette9]

We have our daughter's 529 with Vanguard and I found it pretty simple to set up. If you are interested in creating your own exotic AA within that fund, you can do that. There is also the option to do what is the equivalent of a Target Date retirement fund for the 529: you choose your kid's age and the risk level you are comfortable with. The fund will then automatically become more conservative (i.e. fewer equities and more bonds) as your kid gets closer to college age. We did this option because it is simplest.

You can do more reading here https://investor.vanguard.com/529-plan/age-based-options

[catccc]

We invest with Vanguard for our 529s thru NY's plan.  nysaves.org.  We also use the age based portfolios for our two kids.  No complaints, it's functioning as expected.

[jdhansen]

We just rolled our 9 year old's Americanfunds College Plan over to the Vanguard 529 to avoid paying the load charges with Americanfunds any more.

Was a simple process and Vanguard did the majority of the work.

If I had only understood what Vanguard offered 9 years ago.

[HillCountryHacker]

Can anyone comment on perceived downsides of the 500 index vs the total stock market portfolio?

[VoteCthulu]

I wold prefer the total market index, which owns a cap weighted slice of all categories, but there's nothing wrong with the 500 index.

[Metric Mouse]

We have our daughter's 529 with Vanguard and I found it pretty simple to set up. If you are interested in creating your own exotic AA within that fund, you can do that. There is also the option to do what is the equivalent of a Target Date retirement fund for the 529: you choose your kid's age and the risk level you are comfortable with. The fund will then automatically become more conservative (i.e. fewer equities and more bonds) as your kid gets closer to college age. We did this option because it is simplest.

You can do more reading here https://investor.vanguard.com/529-plan/age-based-options

Interesting. I have some reading to do.

[MrStash]

I would go with the total as well but I think the difference in your returns will be minimal over the course of about a decade whichever you pick.

I have a question on my own, are you required to have the $3000 minimum upfront to start a 529 with Vanguard? Especially if you already have a taxable Vanguard account with VTSAX (over $10,000 balance) in it.
Or can you open a 529 with a $100 and stash away $100/ paycheck? (for example)

[HillCountryHacker]

depends on the fund , but for the total you require $3000 even if you hold VTSAX

[ACLR8R]

Is there any possible tax issues with investing in a state of Nevada plan, in another state?

[jdhansen]

Is there any possible tax issues with investing in a state of Nevada plan, in another state?

There are no tax issues for investing in the plan, as it is considered a 529 plan, just like any other 529 plan available.  As long as all distributions go towards eligible expenses no taxes will have to be paid on the growth.


Certain states, allow for you to count contributions as a tax deduction, sadly California (home state) is not one of those.

Here is a good link that compares all the different state plans and tax treatment of distrubutions:  http://www.savingforcollege.com/compare_529_plans/?plan_question_ids%5B%5D=85&page=compare_plan_questions

Just look up your state and it should confirm my initial answer.