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[quote=Anonymous][quote=Anonymous]OP here…one last question.  Just reading the "DC vs VA 529 forum"…looks like some folks don't use the DC 529 plan because the fees are high (they use Utah? Huh.) Anyway some of you have advised to signif lower my contrib to DD's 529 ($120/yr to match dad's) but the $$ I put in her 529 is tax advantaged…company has a dependent day care account that allows me to set aside up to 5K annually pre-tax to cover child care expenses. I've been setting aside the whole 5K and transferring to 529. What if I lowered that amount to 4K/yr and put in 529 for the maximum tax break? Then it's a pre-tax contribution that further lowers my taxable income after the return (would end up being $333/mo vs $120/mo).[/quote]

You should definitely max out the dependent care fsa, since you can use that to pay your nanny. While you may be using the amount of the reimbursement for the 529 the tax advantage is from the nanny expenses you had to submit for reimbursement.

The tax advantage of the 529 is that most states give you a deduction for the amount of your contribution, so in VA it is like getting a 5.75% instant return. The VA plan is good if you live in VA or you anticipate your kid going to school in va (reasonably low fees and several vanguard options). I am not familiar with the dc plan options. But definitely continue maxing the dependent FSA, just use it to reimburse you for paying the nanny.

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