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Deborah Lahti
about 2 years ago • Seattle

Setting up a 529 College Savings Plan

I want to set one up, but there are so many options. Do I do it through the State's website or choose an outside vendor? Does anyone have any insights on this? Thank you so much.
15 replies
almost 2 years ago
Can't go wrong with vanguard!
see - Vanguard
about 2 years ago
I guess there's two questions: which 529 manager and then which investment.
Briefly googling for "best 529" seems to show the New York State system is well regarded. When we set up 529's ten or fifteen years ago we initially used WA Get, but then quickly switched to Utah. The WA Get system at the time only allowed purchase of tuition credits - not investment in the actual financial markets. Washington State was relatively conservative on credits per dollar, so investing directly in the markets (in a 529) provided better returns. Hence, we used Utah to do that. (Of course, you don't have to be a resident of a state to use its 529 system.)
These days, NY seems to be rated higher than Utah, but I didn't dig in to see why.
As for how to invest once in the 529, I'd agree with Adam that a Vanguard index fund is a good option if the kids are quite young. Some of the 529 plans will automatically shift balance from index fund to bonds and money market as the kids get close to college. This is good for locking in gains and avoiding a potential last minute downturn in stocks.
about 2 years ago
Thank you so much Stuart Marshall and Adama Doppelt for the insights. So incredibly helpful.
about 2 years ago
Lots to chose from and it depends on a few factors - how old are the children? Who are you using as a custodian of your investment assets? Fidelity and Schwab have decent 529 depending on what state. In WA Schwab may have a small advantage over Fidelity
about 2 years ago
The Utah Fidelity plan is actually pretty good - good investment options
about 2 years ago
in some states a tax credit or deduction is applied on contributions to a 529 plan but the client must open a plan in that state
about 2 years ago
about 2 years ago
Thanks Detlef. As you've pointed out, it can be confusing! We are late to the game, our son is 14/high school freshman. I'm hoping to pile some $$ in there in the next 4 years.
about 2 years ago
I also use the Utah 529 plan because it was highly rated when I needed a new plan, when WaGET plan got frozen for a year due to a reduction in tuition which “broke” waGET model. WaGET also offered me to roll over existing funds to DreamAhead plan and that has been a best decision in my opinion- my returns are at 13-14% range (various plans to choose). They are also Washington state 529 plan I believe. Good luck.
about 2 years ago
Likely some haters on this but, I will go against the grain and suggest an alternative ;). I suggest buying real estate. Buy a long term, buy and hold property where the tenants pay down the mortgage, you build equity (ideally), and you benefit from tax advantages (incentives provided by our gov, via 2,500+ pages of tax code). It can be local to you or remote. Tons of information out there. It takes a lot of work. No get-rich-quick-scheme, but can be very beneficial from many angles. This is just another option to consider!
about 2 years ago
Deborah, sorry for the late response! I am new to Fresh Chalk . But, the fact that you are doing this for your kids I praise you for giving them the opportunity to go to college. I have 3 girls that have all graduated without owing a dime. My advice is to listen to all and then go with your gut while you search your options. Because, you will be surprised how many really good people are out there to help you through your journey …. 529.org
almost 2 years ago
Deborarah, I stole that from Katy perry .because I want to see you roar !!! When you get your kids through college I have all the faith in you that you’re going to make the best choice and seriously go with your gut but I think Vanguard is good choice as well as my529 org
almost 2 years ago
But please I am just one of many people that have a lot of knowledge in this area so don’t listen to me
almost 2 years ago
I’m not sure on this matter but I don’t think Washington has a tax credit
almost 2 years ago
I started by searching what was available in my state, that helped me narrow it down from there. Good luck!
almost 2 years ago