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Utah v Nevada 529 and rollover question

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  • Utah v Nevada 529 and rollover question

    I'm in a state that offers a modest state tax deduction for 529 contributions but has overall crappy plan options.  Based on this website they do not recapture tax deductions:  https://www.savingforcollege.com/compare_529_plans/?plan_question_ids%5B%5D=96&page=compare_plan_ques tions

     

    Some questions:

    Is there some minimum time I need to keep the money in my state 529 plan before rolling over without a penalty or any tax implications?

    I am considering the NV or UT 529 plans for their performance and low ERs- any thoughts about which to invest in?  And finally, what investment options do you recommend within these plans?  I was considering one of the "aggressive" age based portfolios...or do people recommend just sticking with something like VTSAX within in the 529?

     

    Thanks in advance!

  • #2
    Do you mind sharing what state you are in?

    You can debate the merits of one plan's ER over another's, but it's not really going to matter as long as you leave the money alone and contribute enough to reach your goals. You have several really good options out there.

    I'll let others comment on how to invest your money.
    Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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    • #3
      I'm in MD

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      • #4
        Utah and Nevada might have been among the lowest cost nationwide 529 plans a decade ago. This is no longer the case.

        The last time I checked; CA TIAA-CREF, AZ/DE/MA/NH Fidelity, IL Union Bank, MI TIAA-CREF and VA Virginia 529 in that order are lower cost than NV and UT in that order.

         

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        • #5




          I’m in MD
          Click to expand...


          Ah - the state with one of the highest but most confusing 529 deduction schemes in the US.

          I'm not familiar with Maryland's tax code for 529s but, if this the information on this site is correct, you should be able to roll it right over. There is no cite to the MD tax code provided and I suspect the information is based on the absence of any language in the code stating rollovers will be taxed. You might want to call the appropriate office at the MD Revenue Cabinet to find out before doing anything.

          Very important to be aware that beneficiaries can have only one 529 r/o per year.  Read the example in Point 1 of this article. Because of MD's 529 structure, you may have multiple 529 accounts. My understanding of this rule is that only 1 acct can be r/o per year. We have a client in MD with 2 children and they have 8- 529 accounts.
          Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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          • #6




            Utah and Nevada might have been among the lowest cost nationwide 529 plans a decade ago. This is no longer the case.

            The last time I checked; CA TIAA-CREF, AZ/DE/MA/NH Fidelity, IL Union Bank, MI TIAA-CREF and VA Virginia 529 in that order are lower cost than NV and UT in that order.

             
            Click to expand...


            Yeah, I got into UT (not a resident of UT) when it was one of the best, but that's no longer the case.  Has anyone moved account from UT to another state's 529 for a better deal?

            I think I probably should move it to CA to get a better deal, but I've put that project on the back burner.  Too much other stuff to deal with.

            Can someone ballpark how much I'm costing myself per year, per $100K of account balance?

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            • #7
              My recommendation was based on the OP going from a higher cost plan to a much lower cost plan. I don't know that I would rollover from NV or UT to a lower cost plan.

              You are probably only talking about a 0.10% difference. On $100K you are only talking about $100/year.

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              • #8




                My recommendation was based on the OP going from a higher cost plan to a much lower cost plan. I don’t know that I would rollover from NV or UT to a lower cost plan.

                You are probably only talking about a 0.10% difference. On $100K you are only talking about $100/year.
                Click to expand...


                Thanks.  That makes me feel a little better about my laziness.  But not much.  Given the expected long-term savings and the time this should take, I really probably should do it.

                 

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