529 plan advice

C

Chapdog

Abreast of the situations
I know what 529's are and the benefits of them. My question really centers around the difference in plans. For instance the MA plan doesn't offer any deduction on contributions but it also doesn't penalize you 10% for non qualified withdrawals. There are differences in all plans and your not required to invest in your own states.

My question is from anyones expericans whats the best STATE 529 plan out there. Id love a plan that makes it easy for reletives to give $50 or $100 bucks for a milestone instead of a stupid toy. I no for example Arkansas has a great set up where you can order coupon invitations for birthdays or what not that get mailed to the members on your list with easy to use instructions on entering a gift.

Additionally, I am considering a Coverdell savings plan but because of the limit of only 2k a year its not real viable so I probably will do that on the side as an extra. Any thoughts on this plan?
 
Chapdog said:
I know what 529's are and the benefits of them. My question really centers around the difference in plans. For instance the MA plan doesn't offer any deduction on contributions but it also doesn't penalize you 10% for non qualified withdrawals. There are differences in all plans and your not required to invest in your own states.

My question is from anyones expericans whats the best STATE 529 plan out there. Id love a plan that makes it easy for reletives to give $50 or $100 bucks for a milestone instead of a stupid toy. I no for example Arkansas has a great set up where you can order coupon invitations for birthdays or what not that get mailed to the members on your list with easy to use instructions on entering a gift.

Additionally, I am considering a Coverdell savings plan but because of the limit of only 2k a year its not real viable so I probably will do that on the side as an extra. Any thoughts on this plan?
Click to expand...

http://www.collegeinvest.org/

similar to what you stated AR has, CO has a system (called UGift) that allows you to email out reminders of bdays etc... with the email comes a gift coupon that makes it easy for relatives to contribute (minimum is $15).

It invests in Vanguard funds, so expenses stay low and it does allow a small degree of control for the individual.

Personally, I do not like the fact that each state is different with restrictions on who you can invest with. It would be more beneficial if the 529's were designed like IRA's where you could go to any financial institution that you wish. But the states will never give up the fees they make from these plans.

http://www.savingforcollege.com/compare_529_plans/ is a good site for comparing the different plans.
 
yes the ugift plan is the one i liked and that Arkansas also uses but then I would lose my state tax deduction on withdrawals because i didn't use the MA plan. I guess its a pro and con decision. the MA plan uses fidelity U-fund. Its not even technically a 529 and it probably doesn't have easy to use ways for family to invest so I would lose money on that end of it. Forgo the state exemption and make it easy for family?!?! sometimes you have to pay to play i suppose.
 
Chapdog said:
yes the ugift plan is the one i liked and that Arkansas also uses but then I would lose my state tax deduction on withdrawals because i didn't use the MA plan. I guess its a pro and con decision. the MA plan uses fidelity U-fund. Its not even technically a 529 and it probably doesn't have easy to use ways for family to invest so I would lose money on that end of it. Forgo the state exemption and make it easy for family?!?! sometimes you have to pay to play i suppose.
Click to expand...

I think the above provides an example of where future lawsuits lie. They are essentially forcing you to use their state plan in order to get the deduction. Fidelity in turn pays the state to limit your options to Fidelity. This creates an environment where the state is not looking out for the benefits of its residents, but rather looking for which fund family will give the state the best deal. Sooner or later, someone is going to sue (and in my opinion win) if they can show they went into Fidelity due to the states restriction and then show that Fidelity performed worse than other 529 options.
 
Superfreak said:
I think the above provides an example of where future lawsuits lie. They are essentially forcing you to use their state plan in order to get the deduction. Fidelity in turn pays the state to limit your options to Fidelity. This creates an environment where the state is not looking out for the benefits of its residents, but rather looking for which fund family will give the state the best deal. Sooner or later, someone is going to sue (and in my opinion win) if they can show they went into Fidelity due to the states restriction and then show that Fidelity performed worse than other 529 options.
Click to expand...

hmm your giving me ideas. lol.
 
I am leaning on the following:

1) For family: Setting up a family friendly 529 like the UGIFT
2) For wife and self: Increasing 401k contribution's by same amount would for a 529. use that money.
 
Goal here is to make it easy for family to invest. I know at times when i got a big bonus i have given little extra to my niece and nephews... but in like gifts or cash or whatever. I would DEFINITELY throw a few hundred into a college savings instead on those occasions.
 
You must log in or register to reply here.
Back
Top