DC Residents - where do you have your 529?

[Anonymous]

I don't fully understand all of this, so apologies if my assumptions are off here, but are the tax benefits to participating in DC's 529 benefit enough to outweigh any improved performance or reduced fees that one might find in another state's 529 plan?

In case its relevant: HHI of $215k, 1 child, 2 years old.

[Anonymous]

I'm pretty sure there is another thread debating this in some detail.

I think the summary was as follows:

1. If you're putting in under $4,000 a year, you should definitely use DC, because the tax deduction is definitely larger than the fees.

2. If you are putting in considerably more than that you should not use DC (at least for amounts above $4,000). Instead, you should use the state with the lowest aggregate fees, because you'll outperfom DC over time.

3. There are hybrid options that are better than either #1 or #2. For example, you can apparently contribute $20,000 to DC then move it to another state fter a few years but claim a $4,000 deduction each year for 5 years, the do the whole thing again. That gets you all of the DC tax deduction and most of the reduced fees.

[Anonymous]

I put in $4,000 in DC, to get the tax break, and everything above that in the New York plan. Roughly, another $6,000.

[Anonymous]

If you are a two parent family you can each put in $4000. We deposit $8000 a year between the two of us to the DC plan.

[Anonymous]

How long do you have to keep the contribution in the DC 529 plan before you can transfer it to another state's plan? Does anyone have a cite? I have been trying to figure this out.

[Anonymous]

Someone in the other thread asserted that you can deposit $20,000, keep it there for two years and then transfer it, but claim the tax credit for five years (and then repeat). That poster did not cite sources for the claim.

[Anonymous]

The dollar value of the tax break is not enough to justify using dc plan unless you only put your dollars into the lowest cost investment option. That's the s&p 500 fund. As soon as you use any of the other funds you'd be better off in lower cost plans.