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Need Advice State 529 Plans

Discussion in 'General Chat Forum' started by smheese, Sep 15, 2008.

  1. smheese

    smheese New Member

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    Did you sign your kids up for 529 plans? I've been meaning to do this, and the state comparison charts are a lot to take in and compare to find the right one. Just wanted to ask around to see if anyone else has done the research yet... and can simplify it. Thanks much!
     
  2. Mr. Linux

    Mr. Linux Senior Member & Moderator Forum Staff

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    I would be very interested in this kind of information as well. I'm King of the Procrastinators and I really need to sign up for this, but I don't know where to start!
     
  3. cindyb

    cindyb New Member

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    We have participated in VEST and it has helped. If you use any other state's 529 plan you don't get the VA tax deduction (or credit, whichever it is). The thing that I appreciate most is that it has only taken at most 2 weeks for VEST to get the payment to the college. Beyond that, I can't tell you much about comparisons out there.
     
  4. sharse

    sharse TeamDonzi rocks!!

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    Our financial advisor specifically suggest we not do a 529 since the fees are so high. He said we're better off putting our money elsewhere.
     
  5. Mr. Linux

    Mr. Linux Senior Member & Moderator Forum Staff

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    Hmmm, what sort of fees are we talking about? Did he/she offer any alternatives? Were the fees 'higher' than some other investments he/she was proposing to you, or just higher in general? Were the tax deductions taken into account?
     
  6. flynnibus

    flynnibus Well-Known Member Forum Staff

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    Good high level (non-VA) overview
    http://www.sec.gov/investor/pubs/intro529.htm

    Big decision is if you go pre-paid or not.. and if not then its very much like picking any investment plan as they are basically just tax-free investing for education-only spending.
     
  7. GeauxTigers

    GeauxTigers Member

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    Fees? I opened the VA 529 (VEST) last year for our son and there was a small ($25 maybe?) setup fee but nothing else that I know of. I know 529 programs can vary from state to state but from what I remember VA has one of the best programs plus you get up to $2k per year deduction on your state return.
     
  8. Mr. Linux

    Mr. Linux Senior Member & Moderator Forum Staff

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    Maybe they were 'account management' fees, which are taken as a small percentage of the amount in the account, like some 401k plans have when you pick certain investment types?
     
  9. cindyb

    cindyb New Member

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    With VEST there is on average a .48% asset-based fee depending on which investment portfolio you choose for your child. We did the age based evolving portfolios which start heavy on stocks, and light on fixed income. By the time our kids reached the age to begin using the money, the account moved to be heavy on fixed income and almost no stocks. There are not any annual account maintenance fees. VEST is a self-funding program and does not receive money from the state to operate.
     
  10. GeauxTigers

    GeauxTigers Member

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    That's the same choice we made. While I hope it's never needed, I also like the fact 529s are protected from creditors.
     
  11. sharse

    sharse TeamDonzi rocks!!

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    You're right... I should have made it clear we were living in MA at the time, so maybe that's different. But he was looking at all the loads and fees and all that jazz.
     
  12. GeauxTigers

    GeauxTigers Member

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    From what I remember in doing my research last year, 529 programs vary greatly from state to state. Depending on which program you are looking at, I could see where some may be a poor choice. The VA programs were ranked near the top for value and if you are a resident you also get the state deduction.
     
  13. cindyb

    cindyb New Member

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    When Upromise started offering links to 529 plans, we looked in to see if it was worthwhile to set up another plan for our kids. VEST is not one of the 529's that is connected to Upromise. We were shocked at the fees charged by most of those plans and we just decided to leave our Upromise money as is, even though it does not earn interest. Between the high fees and not getting the tax deduction on those plans, it was not worth it for us.
     
  14. wahoogeek

    wahoogeek New Member

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    So anyone here go with the VA 529 plan by America Funds? That's the one alternative to the VEST plan. Supposedly they are ranked up there but you have to go with a financial planner (meaning some extra $) to participate.
     
  15. JLC

    JLC Member

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    We did. We used someone from the Wachovia Bank in the Broadlands as the "financial planner". The set up fee was $10 per account.
     
  16. joy

    joy New Member

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    We use the American Funds 529 Va Plan. From our research, we decided it made sense to use a Va plan due to the $2000 Virginia income tax deduction. And use 529 for the tax-free interest. The fee is $10 initially and $10 a year after that. We've done better than straight savings (although today would probably be a bad day to look). We used a financial planner through my work that didn't charge anything more and then now we just manage it through the American Funds website. We use their automatic debit option to save monthly.

    That said, I'm pretty sure the VEST plan was not available when we originally opened our account, just VPEP and CollegeAmerica.
     
  17. razng2grtboys

    razng2grtboys New Member

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    I've been funding my VEST account since 2003, getting a very nice tax write-off, and the piece of mind that I am saving for college. It was one of the best 529's in the country when I signed up and I have no complaints. I don't even have to think about it with the automatic deduction.
     
  18. Zeratul

    Zeratul Well-Known Member

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    Yea I went with the VPEP for our son. I really like the idea of pre-paid tuition. My son is just now 4 and it will be paid this year. I have a new daughter that I think I will do the same with. Other college expenses will be covered by a combination of them and us (at least I think so) and I have other investments to tap into for that.

    I get to continue to claim the tax deductions as well even though I am going to be done paying.
     
  19. fidothedog

    fidothedog Member

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    We have 5 kids. Back in 2001, we purchased the VA Prepaid Tuition plans from VA for a around $12,000 per kid for a 4 year college in VA for a total of $48K (4 kids x $12K). Last year, I purchased a contract for my 5th kid. It cost me $38K for just this one contract for a four year college. This is a huge increase in only 6 years.

    Restrictions are that your kid must go to a VA school (UVA, Va Tech, GMU, GM, W&M, etc.) and the contract covers the tuition only for four years. Contracts are transferable to others or you can opt to receive a cash payment which is the principal with the 2% or so interest rate.
     

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