Comments on: The Three Best 529 Plans http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/ personal finance tips, tricks, and commentary Mon, 13 Feb 2012 01:36:47 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Erik http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-141561 Erik Sat, 27 Feb 2010 20:46:18 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-141561 I originally lived in NY and contributed to my states 529 plan, and then after a few years moved to NJ. I am considering moving the funds to another state sponsored plan or even removing and placing the funds in another investment vehicle. My concern is that if/when I remove th funds, NY State will look to recapture the deductions that I took several years ago when I was a NY State resident. 1 - is this true? and 2- is there anyway to get around this recapture clause? It's just frustrating since I am no longer a NYS resident. I originally lived in NY and contributed to my states 529 plan, and then after a few years moved to NJ. I am considering moving the funds to another state sponsored plan or even removing and placing the funds in another investment vehicle. My concern is that if/when I remove th funds, NY State will look to recapture the deductions that I took several years ago when I was a NY State resident. 1 – is this true? and 2- is there anyway to get around this recapture clause? It’s just frustrating since I am no longer a NYS resident.

]]> By: Hemel http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-114110 Hemel Thu, 03 Jan 2008 07:04:42 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-114110 Boris - You can start contributing to a 529 plan at anytime. Even before the baby is born :) Congratulations, by the way. The advantage of Coverdell is that it covers k-12 and college while 529 only covers college. Boris – You can start contributing to a 529 plan at anytime. Even before the baby is born :)

Congratulations, by the way.

The advantage of Coverdell is that it covers k-12 and college while 529 only covers college.

]]> By: Boris http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-113818 Boris Mon, 17 Dec 2007 20:39:44 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-113818 We're about to have a baby in 2008 -- we can't contribute in 2007, right? Also -- our more immediate concern is private school tuition. Are you contributing to Coverdell Educational Savings Accounts? We’re about to have a baby in 2008 — we can’t contribute in 2007, right?

Also — our more immediate concern is private school tuition. Are you contributing to Coverdell Educational Savings Accounts?

]]> By: nbee http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-79070 nbee Mon, 27 Aug 2007 15:01:52 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-79070 Go to https://www.brightstartsavings.com, click "Forms and Literature" and then enrollment kit. The breakdown is on p. 42 of the pdf file. They're mixtures of S&P, Extended Market, and Developed Markets. So there is some international exposure. Go to https://www.brightstartsavings.com, click “Forms and Literature” and then enrollment kit. The breakdown is on p. 42 of the pdf file. They’re mixtures of S&P, Extended Market, and Developed Markets. So there is some international exposure.

]]> By: NJ_user http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78986 NJ_user Tue, 21 Aug 2007 22:49:22 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78986 Has anyone figured out exactly what Vanguard index funds were chosen for the Illinois Bright Start plan? For the static portfolio choices, it just says "Equity Portfolio" without listing if it will be the Total Market Fund or the S&P 500. I am also troubled that the Illinois plan does not give you the option of investing in an international index fund. Has anyone figured out exactly what Vanguard index funds were chosen for the Illinois Bright Start plan? For the static portfolio choices, it just says “Equity Portfolio” without listing if it will be the Total Market Fund or the S&P 500. I am also troubled that the Illinois plan does not give you the option of investing in an international index fund.

]]> By: nickel http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78747 nickel Thu, 02 Aug 2007 18:51:31 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78747 NCN & Randy: I still haven't worked out how much we're going to save, so we'll probably just pile a bunch in to start and then re-assess as we go along. We're also thinking of just using a single account for the time being despite the fact that we have four kids. Less to keep track of, and we intend to pay for the educations regardless, so it doesn't really matter who the beneficiary is right now. Of course, this will affect age-based portfolios (older kid = less aggressive) so that's something to keep in mind. We can always do partial rollovers into different accounts down the line. As for the max contribution limits, keep in mind that you can actually open accounts in multiple states (and for multiple kids in each state) so you can use the Illinois plan until you hit the limit and then add another out-of-state account if necessary. NCN & Randy: I still haven’t worked out how much we’re going to save, so we’ll probably just pile a bunch in to start and then re-assess as we go along. We’re also thinking of just using a single account for the time being despite the fact that we have four kids. Less to keep track of, and we intend to pay for the educations regardless, so it doesn’t really matter who the beneficiary is right now. Of course, this will affect age-based portfolios (older kid = less aggressive) so that’s something to keep in mind. We can always do partial rollovers into different accounts down the line.

As for the max contribution limits, keep in mind that you can actually open accounts in multiple states (and for multiple kids in each state) so you can use the Illinois plan until you hit the limit and then add another out-of-state account if necessary.

]]> By: Randy http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78746 Randy Thu, 02 Aug 2007 18:41:40 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78746 Once again, timely information. My wife and I have dropped the ball on this. our son turns 9 mos. next week, and I feel like I have missed some potential here. We do live in Illinois, so this is good information. The lower cap gives me pause, but that is very far off to be any sort fo concern (I went to a private catholic university, and $239K would cover it today, but certainly not in 18 years.) My question is this: How are you calculating how much to put in for each child and then the associated frequency? Do you set some target goal and work backwards? Once again, timely information. My wife and I have dropped the ball on this. our son turns 9 mos. next week, and I feel like I have missed some potential here. We do live in Illinois, so this is good information. The lower cap gives me pause, but that is very far off to be any sort fo concern (I went to a private catholic university, and $239K would cover it today, but certainly not in 18 years.)

My question is this:

How are you calculating how much to put in for each child and then the associated frequency? Do you set some target goal and work backwards?

]]> By: Wayne http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78731 Wayne Wed, 01 Aug 2007 20:21:00 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78731 To ntguru: Ohio deduction is $1000. Married filing separate gets you $1000 for each person. I purchased the pre paid tuitions credits in 2001 - right before the "caps" on college increases were lifted. The best investment I ever made. These tuition credits did so well, the State does not allow anyone to buy them anymore. Starting this school year, the State has frozen tuiton for two years - which means the credits will not increase in value. To ntguru:

Ohio deduction is $1000. Married filing separate gets you $1000 for each person. I purchased the pre paid tuitions credits in 2001 – right before the “caps” on college increases were lifted. The best investment I ever made. These tuition credits did so well, the State does not allow anyone to buy them anymore. Starting this school year, the State has frozen tuiton for two years – which means the credits will not increase in value.

]]> By: ntguru http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78721 ntguru Tue, 31 Jul 2007 21:35:25 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78721 Stupid question: if one is lucky enough to live in Ohio, what is the tax deductiblity of the Ohio 529? Is it just state income tax or is fed deductible, too? Stupid question: if one is lucky enough to live in Ohio, what is the tax deductiblity of the Ohio 529? Is it just state income tax or is fed deductible, too?

]]> By: NCN http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78720 NCN Tue, 31 Jul 2007 21:03:24 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78720 Nickel, How are you calculating how much you should be saving for each one of the boys? NCN Nickel, How are you calculating how much you should be saving for each one of the boys?
NCN

]]> By: nickel http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78714 nickel Tue, 31 Jul 2007 18:04:28 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78714 RKP: You're right. I mis-read my own writing and added in a non-existent 0.25% account maintenance fee for Illnois. Once you get to higher balances, Illinois wins clearly wins out, and even at lower balances it's more or less even with Ohio (maybe slightly behind). I updated my post to reflect this information. So at this point I think it will come down to investment choices, which I need to dig into further. I agree that Ohio investment options look better than the Utah (for my purposes) though I haven't really laid them all out side-by-side. RKP: You’re right. I mis-read my own writing and added in a non-existent 0.25% account maintenance fee for Illnois. Once you get to higher balances, Illinois wins clearly wins out, and even at lower balances it’s more or less even with Ohio (maybe slightly behind). I updated my post to reflect this information. So at this point I think it will come down to investment choices, which I need to dig into further. I agree that Ohio investment options look better than the Utah (for my purposes) though I haven’t really laid them all out side-by-side.

]]> By: Lazy Man and Money http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78712 Lazy Man and Money Tue, 31 Jul 2007 17:36:33 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78712 It looks like you found what I found when I did my research last week - Ohio seems to be the best out-of-state option in general. RKP makes a good case for Illinois, however. I ran away because I'm opening it up as a gift for my nephew and only putting $250 to start and $100 a year after that. That makes a $10/yr fee very significant. If I were doing a couple of thousand though, it might warrant a look. It looks like you found what I found when I did my research last week – Ohio seems to be the best out-of-state option in general. RKP makes a good case for Illinois, however. I ran away because I’m opening it up as a gift for my nephew and only putting $250 to start and $100 a year after that. That makes a $10/yr fee very significant. If I were doing a couple of thousand though, it might warrant a look.

]]> By: RKP http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78711 RKP Tue, 31 Jul 2007 16:49:52 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78711 Isn't Illinois the lowest cost plan of the three? Even with the $10/year maintenance fee, expenses would only be a maximum of 0.33% on a $10,000 asset balance. Compared to a maximum of 0.43% for Ohio and 0.58% for Utah. The higher the asset balance, the lower the Illinois (and Utah) expenses will be. An advantage I see for Ohio over Utah (and Illinois) is the three risk level options for their index age-based portfolios. I was ready to go with Ohio over Utah until I saw your site mention the recent Illinois changes. After a quick look on the Illinois website, it appears that the index age-based option is fairly aggressive - it most closely compares to the aggressive asset allocation on the Ohio plan. I was probably going to go with the aggressive option on the Ohio plan, so the Illinois plan may be the right combination of low cost and asset mix for me. Sorry for the long post. Isn’t Illinois the lowest cost plan of the three? Even with the $10/year maintenance fee, expenses would only be a maximum of 0.33% on a $10,000 asset balance. Compared to a maximum of 0.43% for Ohio and 0.58% for Utah. The higher the asset balance, the lower the Illinois (and Utah) expenses will be. An advantage I see for Ohio over Utah (and Illinois) is the three risk level options for their index age-based portfolios. I was ready to go with Ohio over Utah until I saw your site mention the recent Illinois changes. After a quick look on the Illinois website, it appears that the index age-based option is fairly aggressive – it most closely compares to the aggressive asset allocation on the Ohio plan. I was probably going to go with the aggressive option on the Ohio plan, so the Illinois plan may be the right combination of low cost and asset mix for me. Sorry for the long post.

]]> By: nickel http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78710 nickel Tue, 31 Jul 2007 16:36:28 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78710 Dylan, that's a great question, and it's actually next on my list of things to check out. Even if there is a recapture provision, it may be time limited (as you suggested) such that we can wait a certain period of time and then simply roll the money out to another plan without losing the deduction. Even here, though, it's questionable if it would be worth the trouble to do this every year for $120. I guess it depends on how long it takes you to do this sort of stuff as well as how much you value your time. But on principal, I do like the idea of "sticking it to the man." ;) Dylan, that’s a great question, and it’s actually next on my list of things to check out. Even if there is a recapture provision, it may be time limited (as you suggested) such that we can wait a certain period of time and then simply roll the money out to another plan without losing the deduction. Even here, though, it’s questionable if it would be worth the trouble to do this every year for $120. I guess it depends on how long it takes you to do this sort of stuff as well as how much you value your time. But on principal, I do like the idea of “sticking it to the man.” ;)

]]> By: Dylan http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78709 Dylan Tue, 31 Jul 2007 16:05:39 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78709 Does your state have a provision to recapture the deducted amount if you transfer to money to an out-of-state plan? I don’t think every state has closed this loophole. If it’s covered, is there a specified amount of time that contributions need to stay in your in-state plan to keep the deduction valid? You may be able to use the deduction and then transfer the funds after some period of time to a better plan. But then the question becomes, is the little bit of tax savings worth all of the effort? Does your state have a provision to recapture the deducted amount if you transfer to money to an out-of-state plan? I don’t think every state has closed this loophole. If it’s covered, is there a specified amount of time that contributions need to stay in your in-state plan to keep the deduction valid? You may be able to use the deduction and then transfer the funds after some period of time to a better plan. But then the question becomes, is the little bit of tax savings worth all of the effort?

]]> By: MITBeta http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78708 MITBeta Tue, 31 Jul 2007 15:25:57 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78708 Very timely post. My daughter's Christening was this past weekend and now she's flush with cash! Thanks for a great summary. Very timely post. My daughter’s Christening was this past weekend and now she’s flush with cash! Thanks for a great summary.

]]> By: John http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78707 John Tue, 31 Jul 2007 15:11:26 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78707 ro: Yes, you are not limited to what state or college you can spend the accumulated funds in for the above listed plans, and for just about any 529 plans. That allows you to do as nickel is doing and shop-around to find the best plan for your circumstances. Some states have what are known as "prepaid" tuition plans which allow you to buy education years for tomorrow at today's prices. These of course must be used at an in-state (ususally) public institution. John ro:

Yes, you are not limited to what state or college you can spend the accumulated funds in for the above listed plans, and for just about any 529 plans. That allows you to do as nickel is doing and shop-around to find the best plan for your circumstances.

Some states have what are known as “prepaid” tuition plans which allow you to buy education years for tomorrow at today’s prices. These of course must be used at an in-state (ususally) public institution.

John

]]> By: ro http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/comment-page-1/#comment-78706 ro Tue, 31 Jul 2007 14:36:19 +0000 http://www.fivecentnickel.com/2007/07/31/the-three-best-529-plans/#comment-78706 Even if you get an Ohio plan you cen spend it anywhere? (I hope) Even if you get an Ohio plan you cen spend it anywhere? (I hope)

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