Please make me set up a 529 - I need specific guidance

[Anonymous]

I have 8k in a savings account for my 2 year old child. I know I need to set up a 529 account but every time I start I get overwhelmed by options. We live in VA right now but plan to move to SC in the next year. We are USAA and NFCU members. We plan to have only one child. Please guide me. Thanks!

[Anonymous]

VA has some of the best plans in the nation - I think it might still be a good plan for you, even if you move. My father has money in the VA 529 for my brother, and they live in KS. Don't do the prepaid option unless you definitely want your kid to go to school in-state (you'd get the money back but the point of prepaid would be lost.) Diversify between several options. I have 5 of the funds, and I seeded each with 1/5th of my starting funds, and then set up the same monthly withdrawal for each. The year-targeted fund is doing REALLY well for me, so I recently doubled the amount that goes into that one monthly, while keeping the rest the same.

You're at about the same place I was when my daughter was two.

[Anonymous]

There's not a whole lot to it. All you do is set up an online account and deposit the money--voila! 529. If you want a good website with info, this one is great: http://www.savingforcollege.com/529_plan_details/index.php?page=plan_details&plan_id=68

I linked to the SC plans for you. It looks like they're fully tax deductible, which is great. If you can accumulate significant savings each year, you could put your whole $8k into a fund now and then start contributing to the SC fund next year. Or, you could just wait to move to SC and get residency and then contribute the full $8k into their fund. For out of state residents, I think most people agree that the Utah 529 is the best. It has the lowest fees and best returns: http://www.uesp.org/ The easiest approach for the short term might be to invest in an age-based option. Personally, I invest mine in a static fund into Vanguard index funds, but totally your call. You and your spouse can each contribute up to $14k/yr into a 529 without incurring extra taxes.

[Anonymous]

It would depend when you will be fully in SC. VA is nice, in that you can deduct up to 4k per investment choice/child/parent combination. SC appears to be unlimited. Fees in both are low for the index funds available.

Va tax rate is 5.75%, SC is 7%, so the question is whether to put it in VA now and get 460 back, or wait until you are an SC resident and get 560 back from SC. If you plan to be in SC a long time it may be nice to have all the money in one place.

[Anonymous]

My guy recommends Utah as having the best combination of low fees and quality funds. www.uesp.org

[Anonymous]

VA stock index has an expense ration of 0.19%. SC stock index has an expense ratio of 0.20%. The Utah plan expenses are very close - as low as 0.16% (plus some other fees). That tiny difference in expense ratio ($3/year on 8k) doesn't make up for the 460 or 560 in tax savings.

[Anonymous]

If you file Virginia state taxes it makes sense to get a Virginia 529 as you can deduct $4000/year per account. You and your husband could each open an account and deduct the whole $8000.

[Anonymous]

So easy in Virginia - just get the inVEST plan and invest in the offering that is appropriate for your child's age. Thenput in at least $4000 a year - you'll be able to deduct the first $4000 in your taxes. It took me all of three minutes to set up, so so easy!!