Anyone using 529 plans - should I?

[Mr Mark]

I don't have access to a 401k or HSA, just IRA. But I could put funds into a 529. Our kid is currently 10 yrs old, so there would be college eventually and my SO could be getting more education in future too. While the 529 isn't federally deductable, the gains would be tax free right?

So, worth it, given the restrictions on withdrawals? Do a standard Vanguard [Nevada] one, or go through the hassle of a Michigan one (but contributions would then be 4.25% state tax deductable for up to 10k)?

[CowboyAndIndian]

Absolutely, go ahead with the 529.

I use the Utah State plan (even though I live in NJ), since it was the only one which had Vanguard funds when I started for my kids.

Your state may give you breaks in your state income tax if you invest with your state's 529, but make sure that it is a good one. When I started for my kids, the NJ one was so bad that I went with the Utah State plan.

Also, it is a lot shorter period of investing for a kids college education, at best about 18 years or so. So, if you are starting when your kids are older, it is possible that market fluctuations could reduce your gain. I started DS1's 529 in 1998 and had it funded by 2000 hoping that the money would double by the time that DS1 went to college in 2009. Unfortunately, I picked the decade to nowhere and I ended up in 2009 with as much as I had put in.  In the case of DS2, also started his 529 when he was born in 2000 and when he goes off to college in 2018, he will have enough of money for 4 years at a state school with very decent appreciation.

Best of luck