529 plans

greyfri · Post by **greyfri** » Fri Oct 27, 2017 1:23 am

Morningstar has a raings of 529 college savings plans

http://beta.morningstar.com/articles/830917/morningstar-names-best-529-college-savings-plans-for-2017.html

The Utah plan, which I praised previously, rates very high.

NJ is at the very bottom !

SamSan · Post by **SamSan** » Sat Oct 28, 2017 1:21 am

Perfect timing, I was reading up on the MD plan to start investing. Looks like it is pretty decent, has a silver rating. Thanks for the post

greyfri · Post by **greyfri** » Sun Oct 29, 2017 6:33 am

SamSan;665212Perfect timing, I was reading up on the MD plan to start investing. Looks like it is pretty decent, has a silver rating. Thanks for the post

MD seems to use local firm T Rowe Price for managing their plan. That's a good firm, and an in-state tax break is hard to top. But their expense ratios are still mid level to slightly high.

Utah's plan is so low cost, and has such excellent investment choices, that it might even make sense for people in other states, even without a tax break. But I admit to being generally skeptical of active fund management and believing that expense ratios are the number one factor determining returns.

sophisticuss · Post by **sophisticuss** » Sun Oct 29, 2017 6:04 pm

SamSan;665212Perfect timing, I was reading up on the MD plan to start investing. Looks like it is pretty decent, has a silver rating. Thanks for the post

You will immediately benefit exempting $10K ( 5K for each kid) from State tax ( which is very high in MD along with County Tax). Thats almost $600-$700 in ur pocket.

appir2i · Post by **appir2i** » Tue Oct 31, 2017 5:53 am

Thanks greyfri for the post as I am also looking to invest in 529, albeit a bit late. I also saw your comments on the College Savings Plan post recommending the UESP since it offers access to invest in DFA funds. I have a time horizon of 9 years before my kid goes to college. Do you recommend DFA small cap which are quite aggressive for a time horizon of 9 years? BTW, I reside in the CA state and from state tax perspective, are there any considerations that one needs to be aware of? Please advise. Another option that I am considering is the Vanguard 529 plan as well. I am a bit confused whether to go with VG or UESP..

greyfri · Post by **greyfri** » Wed Nov 01, 2017 3:51 am

appir2i;665460Thanks greyfri for the post as I am also looking to invest in 529, albeit a bit late. I also saw your comments on the College Savings Plan post recommending the UESP since it offers access to invest in DFA funds. I have a time horizon of 9 years before my kid goes to college. Do you recommend DFA small cap which are quite aggressive for a time horizon of 9 years? BTW, I reside in the CA state and from state tax perspective, are there any considerations that one needs to be aware of? Please advise. Another option that I am considering is the Vanguard 529 plan as well. I am a bit confused whether to go with VG or UESP..

Small Cap Value is one of DFA's specialities (along with International Value). That being said, high allocations to DFA Small Cap (I think the max Utah allows is 25%) over a 9 year period is quite risky. When I was looking at 529s, I wasn't really interested in using them primarily for educational purposes -- I was thinking of using them for low cost access to DFA speciality funds like DFA small Cap value as part of my total asset allocation (the rest being outside the 529). Or to be clearer, I wasn't thinking of the 529 as a separate pot of money. But if someone intends to use the 529 for educational purposes only, it is a separate pot of money that needs to be allocated by itself as a full portfolio, not as a part of a larger portfolio (not sure if I explained my logic correctly). The takeway is that you should not allocate a lot to DFA small cap Value.

Since CA does not offer a credit for 529s, I don't think it matters from a state tax perspective which 529 you pick.

Vanguard 529 as I understand it, is the NV plan. It's excellent, but several other states (Utah, NY) offer Vanguard managed portfolios. In the end, it's largely about expenses, both the underlying expenses of the portfolios, and that of the administrator. You need to compare those to see which is lowest. But I don't think you can go really wrong with one of the age based options offered by NV, Utah or NY.

appir2i · Post by **appir2i** » Tue Nov 07, 2017 12:22 am

Thanks greyfri for the clarification. Just FYI: I went ahead with VG NV 529 with age based option.

UK bound · Post by **UK bound** » Fri Nov 10, 2017 3:07 am

Any suggestion on whether a 529 plan make sense for TX residents...considering we dont have state taxes

greyfri · Post by **greyfri** » Fri Nov 10, 2017 3:48 am

UK bound;665994Any suggestion on whether a 529 plan make sense for TX residents...considering we dont have state taxes

Yes, because the money accumulates federal tax free. First though, you should make sure you
1) Fund 401k to get max employer match
2) Fund a ROTH IRA, (or if ineligible, do a backdoor ROTH)
3) You might also consider funding a 401k plan to the max possible, even after employer match is maxed out. And if you have a HDHP, consider funding an HSA.

Then if you have money left over, fund a good low cost 529.

VS007 · Post by **VS007** » Fri Nov 10, 2017 4:22 am

Whats a backdoor roth?