Maryland 529 - target date funds or other?

[Anonymous]

We currently have the 529s in target date finds for both of our kids (7 & 9). Recognizing that the fees are somewhat higher than the other available investment options, is it worth it to switch out of the date-based funds at this point? Or are the savings not worth the hassle? If you would switch, any recs?

[Anonymous]

I don't know the fees for the target fund, but going with the target till about 14 is fine. Once they get closer to college, you will want to keep an eye on the balances and guesstimate the prob of a big downturn.

[Anonymous]

Can you switch with the MD 529? I may have missed it but when I set ours up, it looked like you could only invest in the target date funds.

[Anonymous]

It does seem as though you can switch but you have to do it by paper and only once a year.

[Anonymous]

I did calculations and once we hit a certain amount invested the additional amount paid in fees was more than switching to another state with low fee funds and skipping the tax credit. The Maryland legislation should really pressure t Rowe price to lower fees instead being in their pocket.

[Anonymous]

Yeah, I remember thinking around $40k it was worth switching? At the time MD did not recoup tax breaks for rolling money out to another 529 so if that’s true you could in theory put $5k into MD every year, take the tax break and then roll to Utah but never tried that.

[Anonymous]

Yes. Switch. The fees are ridiculous. Put it in the Equity 500 fund where fees are .13%. These fees add up! If I were doing it again, would take the MD tax deduction then send it to Michigan or Utah, but I’m almost done so not worth it. I read about fees when I was younger, but I never understood how ridiculously large they are.

[Anonymous]

My DC has enough in the MD529 plan in a target date fund to cover 4 years in state COA. We save enough in this account every year to get the state tax deduction and the rest goes into an S&P 500 index fund in the Alaska 529 plan for simplicity’s sake because it is also administered by T Rowe Price.

[Anonymous]

The fees are ridiculous but just remember if you switch to adjust the asset allocation over time. You don't want to be posting here in 10 years that all of the money was in stocks and you lost 50% of your college savings in the recession.

[Anonymous]

Anonymous wrote:The fees are ridiculous but just remember if you switch to adjust the asset allocation over time. You don't want to be posting here in 10 years that all of the money was in stocks and you lost 50% of your college savings in the recession.

The 2020 stock market crash happened when my kid was a senior in HS. I was super glad I had preset the Utah 529 to switch out of stocks (of course there was a recovery then but it could have taken years instead of weeks).

That is one thing I liked about utah— you can design your own “target date” fund, so it automatically switches over as your kid gets older but you aren’t stuck with someone else’s idea of a target date.

[Anonymous]

I dont like the Maryland target date funds. Fees are higher and historical returns are not as good as the Global equity fund or the SandP 500 fund.

That said, the fees are not really that high for target date funds.

My kid is 14 so I will read the tea leaves in junior year and decide how allocate. Most downturns last 18 months before recovery, so 2 years of stable cash/bonds would be adequate either in the 529 or in savings/cashflow.