529s in multiple states

[KenZ71]

Not really FIRE related but this forum seems to have the friendliest & smartest money minds around so, a question about College 529 plans.

Seems like the benefit of which state plan is on the way in or at the time of investment not so much during the growth or withdrawal phase, right?

I started a couple under MA / Fidelity while I lived & worked in Massachuseets. Also my parents & grandparents started a couple for my nephews under CT / TIAA-CREF that I now have become the account owner.

Does it matter which state's plan the funds are in when withdrawn? I could transfer the assets if it matters but I can't find anything either way. Any searches for college savings just says start before you buy diapers.

 

[SecondCor521]

You are correct. The benefit is usually a state income tax credit or deduction up to a certain amount per year.

As long as the withdrawals are used for qualified education expenses, it doesn't matter which state plan the funds are in at withdrawal time. The reason for this is that 529s are covered under federal law, not state law.

There are different investments and fees in the various state plans, so you might consider moving assets from one state to another if you like the investments and fees better in one versus the other.

Some states also have maximums on how much can be invested, although the maximums are pretty high. But if you're planning on covering five years at Harvard that could be a consideration as well.