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Looking Into 529 Plans (College Savings) - Help!

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Hi all,


I'm hoping that someone on here might be able to offer some advice for me. You've been so helpful in the past! I have two children (one is 5, the other 6 months) and I'd like to start saving for college for the older one. It will be modest for awhile, maybe as low as 25 or 50 dollars a month, until we can increase our contributions. I've been looking into 529 plans, but I have some unanswered questions and general confusion about the best way forward.


Vanguard has an attractive 529 plan (low ERs, big surprise there), but there you need to invest $3,000 at the outset. We don't have that kind of cash lying around, so I've been looking at other options. My state (NH) has a plan, the "UNIQUE College Investing Plan," which has a lot of underlying investments - none of which are Vanguard funds. The ERs range from .05-1.43, but the minimum initial investment is only $50. The other option I've been looking into is Vanguard's "College Savings Iowa 529 Plan." This has an asset-based management fee of .26 (about 10 points higher than Vanguard's regular 529) and a minimum initial contribution of $25.


So, here are my questions:


1) Out of the three plans I've looked into, does anyone see one of them as clearly a better bet than the others?

​2) For anyone who has traveled down the 529 road before - what am I missing? There seems to be hundreds of different plans out there. Anyone have a good experience going with something different?

​3) There is a confusing paragraph in the FAQ about the Iowa 529. Does anyone understand what this means?


"Keep in mind that you do not actually own shares in the underlying funds. Instead, you own portfolio units of the College Savings Iowa 529 Plan, which means the returns for a particular portfolio may vary from the returns of the underlying funds."


4) Could I squirrel money away into the NH state 529 plan, or the Vanguard Iowa 529, and - when the balance exceeds $3,000 - transfer that money into a Vanguard 529?

5) Can you invest in a 529 plan from any state, even if you are not a resident there? Any downside for me choosing a state plan that is not based in New Hampshire?

6) Would anyone else out there be interested in hearing Dan, Scott, and company devote an entire podcast to 529 plans? They've been referenced in other episodes, but I would benefit greatly from an in-depth look at college planning and 529 plans. Just curious.


I would LOVE any help that anyone on here could provide. I've read as much as my brain can handle, and now I'm feeling stuck.





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I've never owned a 529 plan so I would be afraid to answer some of your questions. However a couple of things: You can invest in any 529 plan in any state you want. I think about 30 or so states have plans and more may have added .You don't have to stick to your particular state. I would explore every state's 529 plan and invest in the lowest cost plan. This would include all fees and expense ratios combined. A plan featuring only Vanguard index funds would be ideal but there may be others. Here in Virginia, unless it has changed, the plan goes with American Funds. Look closely at state tax deduction benefits a state might or might not offer. My understanding is its better to go with a lowest cost plan regardless of tax benefits.I would also compare each plan's performance over a 5 year period and keep that in consideration. Keep in mind my understanding is you must use that money for educational purposes only.


Also, I may be wrong but if you set up an automatic investment plan where you have a set amount of money withdrawn from your checking /savings account monthly I think you can get by that $3,000 minimum. Don't hold me to that but check that out.


I think you have to do your own research. Hopefully others will correct me or fill in the gaps in your questioning but frankly I think it is something you'll need to research and explore on your own.


Let us know what you find out. I hope I have helped you some.



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I had this same problem several years ago and found it to as confusing as the current 403b situation. I found the website savingforcollege.com to be very helpful. Also, in major cities, Fidelity has walk in offices and they were very helpful. However, my recollection was that they all had high fees and limited choices. I opted to go with the Coverdell ESA instead. The website that I mentioned compares the two plans. Bob

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