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CA 529 Plan

MissionHockey 124 34 August 29, 2015 at 11:39 AM
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Hello,

I live in California and I'm looking to open a 529 plan for my son. I've tried to read about and understand them with little success. Does anyone know of any they would recommend? I know in CA there is not a tax benefit, but this will help him will college. I've read the boglehead forums also! You're help is appreciated. Thank you.

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#2
I live in AZ and have an Ohio plan. I like Ohio because there are vanguard funds available.
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#3
I'm not positive, but I think you're right that there is no tax benefit to going with California's 529 plan. However, California's Scholarshare College Savings Plan [scholarshare.com] is one of the very best in the country. But, Utah's Educational Savings Plan Trust [uesp.org] is the number one plan in the country so, if it were me, I'd go with that one.

Just remember to keep the money in your name, not your child's name, to avoid them getting penalized regarding financial aid, if they happen to need it. The 529 money in your name is still technically considered when calculating for financial aid, but its consequence is so small it's essentially irrelevant - a maximum of 5.64% of the money in the 529 will be considered as the child's assets. So, clearly, it's better for you to save inside of a 529 plan - again, that's in your name - than to avoid it for concern of it harming your child's chance for financial aid should they need it.

Also, read this guide [clarkhoward.com] to learn about 529 plans as well as which plans are the best in the country. Something important to keep in mind: Some states have multiple plans, so only the exact plans linked to in the guide are the best - not any of the other plans a state may offer.
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#4
Thank you for your help! Just got done setting up the Utah's Educational Savings Plan Trust. My son is 8 and I chose to invest aggressive in global funds. What do you think regarding this choice?
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#5
Quote from MissionHockey View Post :
Thank you for your help! Just got done setting up the Utah's Educational Savings Plan Trust. My son is 8 and I chose to invest aggressive in global funds. What do you think regarding this choice?
I would have either chosen the Age-Based Moderate or the Age-Based Aggressive Global option that you did. I like the percentage of international exposure that the Age-Based Aggressive Global has over the Moderate since most of the growth in capitalism is now, and for the foreseeable future, outside of the United States. But, I like the higher percentage of cash and lower percentage of stock exposure in the years that your child would be close to and in college in the Moderate plan better.

So, with all of that said, if it were me, I'd probably go with the option you chose - Age-Based Aggressive Global - and stress to my child the importance of earning money as soon as they could (15-16 years old) as well as saving much of this money for their college expenses. That way, they'll have two piles of money to draw from and will need to rely less on loans.

Great decisions all the way around on your part.
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#6
Thanks a bunch for your help. For now, I changed it to Age-Based Moderate Global. The site is really user friendly and I can change it relatively easy if I need to. I figured this would be a good place to start. I regret not starting a 529 plan earlier for him, but better late then never. Thank you again for your help!
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#7
I'm been debating between the CA 529, Utah and Vanguard so I'm glad this thread popped up. Once I pick one I just need to decide how much to contribute.
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#8
I'm glad it helped you out. I can only imagine how much college will cost when that time comes!
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#9
I chose scholarshare for my niece. I have my contributions invested in socially responsible portfolio at the moment.
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#10
Quote from Brian1 View Post :
Just remember to keep the money in your name, not your child's name, to avoid them getting penalized regarding financial aid, if they happen to need it. The 529 money in your name is still technically considered when calculating for financial aid, but its consequence is so small it's essentially irrelevant - a maximum of 5.64% of the money in the 529 will be considered as the child's assets. So, clearly, it's better for you to save inside of a 529 plan - again, that's in your name - than to avoid it for concern of it harming your child's chance for financial aid should they need it.
How does opening a 529 under parent name works? Do you open a plan under your name and list your kid as beneficiary or don't you list them at all?
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Last edited by slicbrat September 1, 2015 at 01:57 PM
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#11
Quote from slicbrat View Post :
How does opening a 529 under parent name works? Do you open a plan under your name and list your kid as beneficiary . . .
Correct. Open it in your name and list your child as the beneficiary.
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#12
Quote from Brian1 View Post :
Correct. Open it in your name and list your child as the beneficiary.
Thank you!!!
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