529 plans - how to start?

[Anonymous]

If you're in MD, I'll make it simple for you. Do this:
https://maryland529.com/college-savings-plans-of-maryland/maryland-college-investment-plan

This can be used at any college, and for secondary private school also (thanks to new tax law passed in December).

You get an MD tax benefit on your state taxes by putting it into MD's plan. Move it out later if you like, but MD lowered their fees last year, so personally we're just keeping the money in there.

You can put up to $2500 per parent (or grandparent) per kid, so that's $5k ($2500 for each parent) each year. You need to have your kid's SSN issued to open the account.

To make it simple, put it in the plan that is based on when the kid will go to college, like the Portfolio 2036 option.

YOu're about to have a baby so you'll have your hands full. You can't go wrong with the above method. You might be able to get slightly lower fees in another state, but worry about that _after_ you put the $$ into the MD plan, as the tax benefit is worth it.

Done.

[Anonymous]

We went with Utah's 529 plan, which has a great track record and low fees. At the time, DC's fees were higher, undercutting the tax benefit. You just pick one and open the account. Some of them have multiple investment options--we went with an index fund.

[Anonymous]

mjsmith wrote:you don't need to open one with any one particular state or locality

you can speak with any financial person and start a 529 with any company. ameritrade, fidelity, vangaurd, tia cref, ect...

yes there are some tax benefits with using your states 529 plan. but it may not be as aggressive as private plans..

Every 529 is attached to a state. What that means for you depends where you live.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We just logged on to the VA529 website, filled out the information, dropped money in and we were done.

We could have set it up through our financial advisor but didn't want to pay the middleman fees. VA529 has an age based portfolio so we just chose that one and it's done well.

Same and I'm in VA. I put the max that's deductible on state taxes (4k) in a year into the age based portfolio.

I couldn't open the 529 until I had a social security number for the baby.

I'm also in VA and using their 529 plan. What do you think about the fees for the age/target funds vs. picking the funds yourself from the passively-managed static funds? The fees seem to be significantly higher for the target date funds (about 0.5% vs. 0.14%).

[Anonymous]

https://www.savingforcollege.com/ has an easy way to click and compare plans. But don't get overwhelmed by choosing the "best" one. Choose one that has a decent rating and that you know will be easy for you to do. (I opened ours with USAA for example, because I am on the site all the time and readily see the balance and remember to kick over extra money when we have it.) I also considered the MD one because we live in MD but ultimately decided the tax break wasn't significant enough and I didn't want to deal with another financial institution.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Higher return means higher loss when market turns south.

That is not how this works!

Exactly. Which is why we did a basic VA prepaid for 4 years for both of our kids and they share a large invest account.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Higher return means higher loss when market turns south.

That is not how this works!

Exactly. Which is why we did a basic VA prepaid for 4 years for both of our kids and they share a large invest account.

Exactly what??

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DC plan is horrible because of the high fees. My spouse believes it's still a good deal for the DC tax breaks given to DC residents, but I am not persuaded.

DC's plan USED to be horrible (Calvert Investments was manager) but you could get the tax break and then transfer funds elsewhere after a year. However, DC changed fund managers a year or so ago and I think it's better now, but have not done research to see how much better now.

Yes, but DC residents still have to pay annual maintenance fees. It’s ridiculous.

Can you point me to where you see this? I think you may be talking about the fund expense ratio. If you look at other "states" their funds have expenses too. Are DC's more than others? I'm not sure, but it looks similar. I have some IL 529 and they have a few dollar like admin fee I think regardless of the funds used.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DC plan is horrible because of the high fees. My spouse believes it's still a good deal for the DC tax breaks given to DC residents, but I am not persuaded.

DC's plan USED to be horrible (Calvert Investments was manager) but you could get the tax break and then transfer funds elsewhere after a year. However, DC changed fund managers a year or so ago and I think it's better now, but have not done research to see how much better now.

Yes, but DC residents still have to pay annual maintenance fees. It’s ridiculous.

Can you point me to where you see this? I think you may be talking about the fund expense ratio. If you look at other "states" their funds have expenses too. Are DC's more than others? I'm not sure, but it looks similar. I have some IL 529 and they have a few dollar like admin fee I think regardless of the funds used.

No, it’s an account maintenance fee. $10/account for residents and $15/account for non-residents, pain annually.
https://www.dccollegesavings.com/home/faqs.html

[Anonymous]

It may be dumb to say this because everyone on this thread is informed - but congratulations OP for making a way to save for your child's college education.

I recently spent some time in the financial aid office at a top college and witnessed a parent crying in the corner. Her child, who was admitted to the school was consoling her. Even with generous FA they couldn't make it work. One of the most heartbreaking things I ever saw.

[Anonymous]

MD plan is guaranteed by the state legislature. In other words, there is more security and money is kept aside each year in MD budget to fulfill the prepaid MD plan obligation to consumers.

No other state offers that.

We went with MD Prepaid plan because we wanted some kind of "Worst Case" scenario guarantee in making sure our kids at least got a college education. I did not want to lose college money if the market collapsed. As it turned out our Plan B turned out to be the best Plan A.

[Anonymous]

Anonymous wrote:It may be dumb to say this because everyone on this thread is informed - but congratulations OP for making a way to save for your child's college education.

I recently spent some time in the financial aid office at a top college and witnessed a parent crying in the corner. Her child, who was admitted to the school was consoling her. Even with generous FA they couldn't make it work. One of the most heartbreaking things I ever saw.

That was one of the most heartbreaking things you've ever seen? Really? That's great!

At least they realized before DC started, not a few years and a few hundred thousand dollars later.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It may be dumb to say this because everyone on this thread is informed - but congratulations OP for making a way to save for your child's college education.

I recently spent some time in the financial aid office at a top college and witnessed a parent crying in the corner. Her child, who was admitted to the school was consoling her. Even with generous FA they couldn't make it work. One of the most heartbreaking things I ever saw.

That was one of the most heartbreaking things you've ever seen? Really? That's great!

At least they realized before DC started, not a few years and a few hundred thousand dollars later.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It may be dumb to say this because everyone on this thread is informed - but congratulations OP for making a way to save for your child's college education.

I recently spent some time in the financial aid office at a top college and witnessed a parent crying in the corner. Her child, who was admitted to the school was consoling her. Even with generous FA they couldn't make it work. One of the most heartbreaking things I ever saw.

That was one of the most heartbreaking things you've ever seen? Really? That's great!

At least they realized before DC started, not a few years and a few hundred thousand dollars later.

Is it necessary to be an *sshole?

[Anonymous]

Anonymous wrote:

Anonymous wrote:
Can you point me to where you see this? I think you may be talking about the fund expense ratio. If you look at other "states" their funds have expenses too. Are DC's more than others? I'm not sure, but it looks similar. I have some IL 529 and they have a few dollar like admin fee I think regardless of the funds used.

No, it’s an account maintenance fee. $10/account for residents and $15/account for non-residents, pain annually.
https://www.dccollegesavings.com/home/faqs.html

From browsing https://www.savingforcollege.com/529_fee_study/ , maintenance fees range from $0-$25 across states. On $10k, $10 amounts to 0.1%. This is insignificant in the grand schema of things compared to about 9% tax break on deduction. The fund fees and performance are much more significant determiners of account balance growth. This is what needs comparison and not a small maintenance fee.