I'm getting ready to set up a 529 plan for my second daughter. I've done enough research that I think I know what I want to do. I've already maxed out all other tax-deferred savings options. I'm curious if anyone has any reasons to NOT take this approach.
I currently live in California. CA offers zero state benefits for investing in 529 plans, so I can really invest in any state I want. We do plan to relocate out of CA over the next few years, with Colorado being the most likely option. I give us a 60% chance of relocating to CO in the next two years.
The state tax benefits for CO residents seem pretty good, with the ability to both deduct contributions from current year income, and avoid taxes on investment gains. Fund fees are 0.36%, although I don't have much basis to know if that is high or low for a 529 plan.