Which 529 plan is the best?

Amazon
bvamzn

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bvamzn
Jan 15, 2021 13 Comments

Which state's 529 is the best? Heard Nevada (Vanguard), NY and Utah are good, Any suggestions?

I am in Washington, so savings on state tax is not applicable

#personalfinance

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TOP 13 Comments
  • Google
    FIRE man

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    Blogging about tech careers and personal finance at https://EngineerSeekingFIRE.com
    FIRE man
    Can you define “best”?

    What are you looking for? Lowest fees? Most investing options? Specific funds (eg you prefer Vanguard or Fildelity or DFA)? Best glide from stocks to bonds as your child is ready for college?

    Each question has a different answer. What are your criteria for “best”?
    Jan 15, 2021 2
    • Amazon
      bvamzn

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      bvamzn
      OP
      I would say "Best" would be something that would be a combination of what you mentioned, max return with lowest fees, automatically gliding per child's age, all considering considering 15-16 year horizon. Specific fund shouldn't matter. Which are the ones in each area?
      Jan 15, 2021
    • Google
      FIRE man

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      FIRE man
      There are different options and you cannot have it all :)

      CA 529 is the lowest fees, but it uses TIAA-CREF funds.

      NV 529 is the lowest fee plan with Vanguard funds, but does not offer glide path funds (ie you’ll need to automatically rebalance). Also, it integrates with your Vanguard dashboard (if you have other Vanguard accounts as well, this is convenient).

      NY 529 is another low cost Vanguard option. Haven’t looked at it much, but if you’re in NY then it gives you tax benefits, so it’s definitely the plan to select.

      UT has both Vanguard and DFA funds, as well as plans with glide paths, but has higher fees.

      There are the 4 plans that show up in most discussions. The more options they provide you, the higher the fees. So it’s up to you, if you’re a DIY person or if you want to automate it all.

      Also, if you prefer to use Fidelity funds (instead of Vanguard funds), then good options are Arizona, Delaware, New Hampshire, Massachusetts. Haven’t looked at their offerings much, but they have similar fees.

      You can also look at multiple reports, eg https://www.morningstar.com/articles/1006084/the-top-529-college-savings-plans-of-2020 but remember that they also rank the plans based on their criteria, which might be different than yours.
      Jan 15, 2021
  • Apple / Eng
    yuriy

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    Amazon, Google
    yuriy
    I use NextGen 529 with Merrill Lynch.
    Jan 15, 2021 0
  • Oracle
    NEPT14

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    NEPT14
    Why not just add in Roth(if you can)? All 529s invest in low risk mutual funds anyway
    Jan 15, 2021 7
    • Oracle
      NEPT14

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      NEPT14
      for roth, first is 5 years, then probably no tax on the principle, rest can be taken out for some needs without tax i think
      Jan 15, 2021
    • Amazon
      2CLdnV

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      2CLdnV
      They have different purposes and different eligible uses for tax-free withdrawals.

      529s are specific to education related expenses and can be passed to some subset of allowed relatives without tax consequences (eg. children, grandchildren, some others).

      Roth IRAs are intended for retirement and a few other allowed uses.

      If you're planning to invest for someone's education in 5+ years, a 529 is great. If it's for your retirement or to pass on after you die, retirement accounts like IRAs are perfect. If you've maxed out everything and plan to use the money sometime before or during retirement, nothing wrong with taxable accounts.
      Jan 15, 2021
  • Amazon
    2CLdnV

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    2CLdnV
    Any that have reasonably low fees and good investment options, I'm also in WA and use Nevada's 529 with Vanguard for simplicity so I can have it with my other accounts that are at Vanguard.

    It looks like others may have lower account fees, so it be worth checking out others if your invest elsewhere anyway or don't mind having a 529 at a different investment company from your other accounts.

    https://money.usnews.com/529s/washington shows as being updated in 2019 but may be a good starting point to check out a few plans. Look for a combination of low fees and investment options that meet your needs.
    Jan 15, 2021 0