Starting a 529. Live in DC. Which state to use?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I know but the issue was at what point the fees outweigh the tax benefit

529 fees by state -

http://www.savingforcollege.com/529_fee_study/

I am familiar with this site but doesn't seem to address that question at all.

[Anonymous]

Anonymous wrote:I forget the specifics because we did the research years ago, but I believe at some income level, there is no tax advantage to use the DC fund. That is why we went with Utah.

There isn't an income limit for the DC deduction, so I don't think this is true. It is true that at some investment level, the icnreased fee would swamp the tax benefit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I forget the specifics because we did the research years ago, but I believe at some income level, there is no tax advantage to use the DC fund. That is why we went with Utah.

There isn't an income limit for the DC deduction, so I don't think this is true. It is true that at some investment level, the icnreased fee would swamp the tax benefit.

If you were in a very low income bracket (eg if you were a single-income military family receiving combat pay, which is untaxed), maybe the deduction wouldn't help you that much?

[Anonymous]

I suppose that's true. If your income is below $40,000, your max tax savings per child per year is only $240, so it wouldn't take a ton of fees to overwhelm those savings.

[Anonymous]

(I think it would be a kind of a unique situation - like the military example - where your adjusted gross income is not in one of the top two DC tax brackets but you're putting large sums into your kid's 529).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I forget the specifics because we did the research years ago, but I believe at some income level, there is no tax advantage to use the DC fund. That is why we went with Utah.

There isn't an income limit for the DC deduction, so I don't think this is true. It is true that at some investment level, the icnreased fee would swamp the tax benefit.

If you were in a very low income bracket (eg if you were a single-income military family receiving combat pay, which is untaxed), maybe the deduction wouldn't help you that much?

I make <80K, file head of household, and don't contribute enough to care about a tax deduction.

[Anonymous]

Then you don't contribute enough to care about fees either. . .

[Anonymous]

Our experience with the DC 529 was that the performance was awful, saw a huge difference between the DC fund and money we had in a Nevada Vanguard 529. Moved all the money from DC to the Nevada fund and have been very happy.

[Anonymous]

Anonymous wrote:There was another thread on this recently with a lot of good info about the tax benefits (DC taxes) of the DC plan. It's up to $4000 per parent per kid.

NO. it's up to $4000 per parent. the maximum deduction for any adult is $4000.

[Anonymous]

Anonymous wrote:Our experience with the DC 529 was that the performance was awful, saw a huge difference between the DC fund and money we had in a Nevada Vanguard 529. Moved all the money from DC to the Nevada fund and have been very happy.

Performance in 2013 was great. 25 percent or so return.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Our experience with the DC 529 was that the performance was awful, saw a huge difference between the DC fund and money we had in a Nevada Vanguard 529. Moved all the money from DC to the Nevada fund and have been very happy.

Performance in 2013 was great. 25 percent or so return.

The state street fund is an index fund with low expenses (relatively). .5% I think it follows S&P 500. It did quite well this past year. We do 100% this fund. The other funds have high expenses (over 1% i believe).