529 plans for CA?

[wanaberetiree]

Hi all

Happy New Year ! [emoji312]

I am considering to open a 529 account and compared several options, such as Fido, VG and Schwab. And learned lots of nuances about those 529s. Also surprisedly it seems that the most cost efficient plan is by https://www.scholarshare.com managed by TIAA CREF for California (where I live).

So wanted to ping this group for opinion to make sure that I did not miss anything.

Pls share your experiences with 529 plans and best recommendations

Thx

[wanaberetiree]

Nobody is using 529 ?

[FlaGator]

Quote:

Originally Posted by wanaberetiree Hi all Happy New Year ! [emoji312] I am considering to open a 529 account and compared several options, such as Fido, VG and Schwab. And learned lots of nuances about those 529s. Also surprisedly it seems that the most cost efficient plan is by https://www.scholarshare.com managed by TIAA CREF for California (where I live). So wanted to ping this group for opinion to make sure that I did not miss anything. Pls share your experiences with 529 plans and best recommendations Thx

My initial 529 was CA-sponsored and managed by TIAA-CREF. At the time I expected to return to CA and figured if there were any state tax benefits, having this plan would help. Opened it in 2001

Regrettably, TIAA-CREF soon headed into an era of exceedingly poor institutional management and investment performance. Was so bad, CA replaced them as managers. I transferred the account to NY's Vanguard-managed plan.

Fees for the CA plan's passive funds compare favorably to the NY plan, but the individual fund options are more limited. Their managed fund fees are reasonable, if active management is your thing.
https://www.scholarshare.com/research/fees.shtml

https://www.nysaves.org/home/which-i...ortfolios.html
(have to click through the individual funds to see the fees. May be a table somewhere I couldn't find)

I've had the accounts at NY/VGD for over 10 years and the investment choices were initially "good enough" and have gotten more diverse. Performance is inline with what I expected for those investments.

The accounts were set up for each of the kids before they were a year old and aggressively funded for a few years (but not at the expense of 401K and other savings), and I haven't contributed anything since they were each about 4 years old.

Would I do it again? At the time, it seemed like the best way to lock up some money for their education, no matter what happened to my career. The tax-free growth and ability to spend those gains on education expenses is even more attractive now that my income is derived solely from investments. So, yes I would.

If I were shopping today I would look for a VGD or DFA managed program (irrespective of the state sponsor) that had a range of fund choices-small/large/intl/value, etc. and low fees.

[wanaberetiree]

Quote:

Originally Posted by FlaGator .... If I were shopping today I would look for a VGD or DFA managed program (irrespective of the state sponsor) that had a range of fund choices-small/large/intl/value, etc. and low fees.

Thanks for your reply and very interesting!

I can't say now that VG is more attractive then TIAA GREP - CA. Would you still go with VG today?

Also in light of new tax law, e.g. ability to withdraw 10K/year/child for private schools, how would you adjust your investment choices ?

[FlaGator]

Quote:

Originally Posted by wanaberetiree Thanks for your reply and very interesting! I can't say now that VG is more attractive then TIAA GREP - CA. Would you still go with VG today? Also in light of new tax law, e.g. ability to withdraw 10K/year/child for private schools, how would you adjust your investment choices ?

Probably would still go with VGD. I wouldn't use the CA plan due to the limited passive options and my prior experience with TIAA-CREF. Would certainly stay away from the active funds if their passive ones met my needs.

If I were planning on using the account for k-12, I wouldn't be running it at 100% equity like I did for the first 14 years. I'd evaluate when the $$ would come out and put anything needed in less than 5 years into bonds and adjust annually. My 11th grader's account is at 45/55, figuring some won't be needed for 5 years and the balance available for grad school. The 7th grader's is still 100% equity. I know those are more aggressive allocations than typically recommended.

[ocean view]

We are in CA and have a 529 with scholar share. We invested 27K in 2003, today it is valued at $78k. We never intended to actively manage this account, so it is in an age based fund. It’s been fine for us.

[RE2Boys]

I have found this site very helpful in researching and rating variou 529 plans: The Internet Guide to Funding College and Section 529 College Savings Plans. Savingforcollege.com

Back in 2001 I lived in Alabama and the in-state plans were crap. Went with the Utah 529 plan (underlying Vanguard funds) at that time. Currently, as both boys are in college , I've moved all funds to the Colorado Stable Value 529 plan to insure it is there and should not go down in value.

[wanaberetiree]

Thx all! Happy 2018!

[rodi]

Hi -

There's no tax advantage to staying with California's 529 plan... so we went with Vanguard .... I think it's Nevada... maybe Utah... doesn't really matter.

Some states give you a break on state taxes if you use the in state 529 plan. Not California. We like the low expense rate of the Vanguard plan.

One kid is a junior, the other a freshman... so we're still in the 529 world.