529 plans - how to start?

[Anonymous]

Baby will be arriving in a few months and we are planning to open a 529. We have just started our research though and I’m hearing that you can open plans in different states, and that Maryland’s plans don’t have a great return. If you have a 529, what state did you open it in? Any advice for someone about to open one?

[Anonymous]

We have MD investment plans. Mostly due to state tax deductions. Higher return means higher loss when market turns south.

[Anonymous]

We do both the prepaid college trust and the 529 in MD for the tax deduction. Extra $ we put in NY’s plan, which has the lowest fees. But overall MD’s plan isn’t that bad (and MUCH better than the DC plan).

[Anonymous]

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.

[Anonymous]

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

That is not how this works!

[Anonymous]

As with other investment options, pay more attention to fees than returns. If you are in MD one option is to contribute to MD for tax advantage and then roll over to a lower fee plan somewhere else.

[mjsmith]

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..

[Anonymous]

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.

[Anonymous]

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.

[Anonymous]

Anonymous wrote:

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

That is not how this works!

How does it work then?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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

That is not how this works!

How does it work then?

I am interested in knowing from PP how it works too. Unless you have a prepaid plan, 529 Investment Funds are basically target funds - mix of stocks/cash/bonds. The more money you have in stocks, your return will be higher in a bull market but it will also result in a higher loss in a bear market which US is about to enter soon.

[Anonymous]

Anonymous wrote:I am interested in knowing from PP how it works too. Unless you have a prepaid plan, 529 Investment Funds are basically target funds - mix of stocks/cash/bonds. The more money you have in stocks, your return will be higher in a bull market but it will also result in a higher loss in a bear market which US is about to enter soon.

So you're all-in on a short position?

[Anonymous]

^ Personally, I am in a "standing" position. How about you?

[Anonymous]

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.

[Anonymous]

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.