So confused about 529s

[Anonymous]

I need to start one for future baby, and am very confused about 529 plans. We currently live in VA, but are not planning on staying here long-term. So does the VA plan still make sense for us or would we better off with something like the Utah plan that people seem to recommend?

[Anonymous]

You can use any plan you want. You can get a $4k deduction if you live in Virginia and use Virginia's plan. We decided to go with Utah (and not get a deduction) because we liked the investment options better and the fees were lower.

[Anonymous]

pp pretty much hit on the head. That said, VA's plans are pretty good, including the prepaid plan.

The deduction basically offsets the fees. The tax savings on a $4,000 deduction is about $200.

[Anonymous]

You can also start one in VA and open a Utah one when you move.

[Anonymous]

I am the 9:40 poster

The other thing you could do if you like the Va plan enough - fund it to the $4k level so you get the deduction, the put the rest in a Utah (or whatever plan you like best) plan. If you move out of Va, just stop putting money in the Va plan.

[Anonymous]

But would VA's plan still be good for us if we move out of state (which is likely to happen in the next 2-3 years)? If we move out of state, then we won't be able to take the tax deduction so that's something I need to take under consideration.

[Anonymous]

Yes. 529 plans are just savings vehicles for college expenses. They are not prepaid plans that have to be used for a particular state's school.

[Anonymous]

Anonymous wrote:I am the 9:40 poster

The other thing you could do if you like the Va plan enough - fund it to the $4k level so you get the deduction, the put the rest in a Utah (or whatever plan you like best) plan. If you move out of Va, just stop putting money in the Va plan.

Is it possible to roll it into the Utah (or whatever) plan so that we don't have to deal with tracking two plans?

[Anonymous]

Anonymous wrote:But would VA's plan still be good for us if we move out of state (which is likely to happen in the next 2-3 years)? If we move out of state, then we won't be able to take the tax deduction so that's something I need to take under consideration.

Yes, it will be. The money you invest is still yours.

VA has several plans. The College America plan is the most expensive -- mutual funds that charge 5.75% load, but have been making decent returns lately. There's also VEST, which is a savings plan, prepaid tuition, the window for which only exists once a year, and one other option that I'm blanking on.

I'm not saying "Go Virginia" by any means, but if you decide to do it and move, that's sort of inconsequential.

[Anonymous]

Anonymous wrote:Yes. 529 plans are just savings vehicles for college expenses. They are not prepaid plans that have to be used for a particular state's school.

Right I understand that. I just meant in terms of fees and investment options. Is the primary benefit of the va plan the fact that the tax deduction offsets fees if you are a resident, or is it competitive enough with other plans enough that when we move away, it would still be considered a good plan with low fees and good potential returns.

[Anonymous]

(Thanks everyone for replying, obviously I'm not very well versed in the world of 529 plans)

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am the 9:40 poster

The other thing you could do if you like the Va plan enough - fund it to the $4k level so you get the deduction, the put the rest in a Utah (or whatever plan you like best) plan. If you move out of Va, just stop putting money in the Va plan.

Is it possible to roll it into the Utah (or whatever) plan so that we don't have to deal with tracking two plans?

You can roll them but I believe you then have to pay any tax savings back to your original state.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes. 529 plans are just savings vehicles for college expenses. They are not prepaid plans that have to be used for a particular state's school.

Right I understand that. I just meant in terms of fees and investment options. Is the primary benefit of the va plan the fact that the tax deduction offsets fees if you are a resident, or is it competitive enough with other plans enough that when we move away, it would still be considered a good plan with low fees and good potential returns.

I'd revisit this question after you move. The answer today could well be different in a few years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes. 529 plans are just savings vehicles for college expenses. They are not prepaid plans that have to be used for a particular state's school.

Right I understand that. I just meant in terms of fees and investment options. Is the primary benefit of the va plan the fact that the tax deduction offsets fees if you are a resident, or is it competitive enough with other plans enough that when we move away, it would still be considered a good plan with low fees and good potential returns.

Va is supposed to be a good plan if you live in the state because of the deduction. It is not a good plan for an out of state family.

[Anonymous]

Also, there's vert little "tracking" involved. We just picked the fund based on the year the kids would enter college. And did nothing else til I directed VA529 to send checks to the colleges to cover the kids' tuition bills. It's really very easy.