Out-of-state 529s

[Zek, The Grand Nagus]

Anyone have a favorite 529 plan out there?

I'm a PacLife Montana plan kind of guy, and Missouri Upromise for those with the card.

Ron

[anonymous]

Ron, don't let the fact that someone participates in Upromise influence the 529 decision. Upromise is nothing more than a rebate card. The whole "saving for college" is nothing more than a hook to get people involved. If you like PacLife Montana, you can simply instruct people with Upromise to have a check sent to them. They can then send it to Montana or buy a pack of cigarettes.

The most popular 529 plan is Virginia. It is nothing more than American Funds with a .1% kickback going to the state. The 12b-1 fee is .05% lower than other American Funds, so in short, to the consumer, it is American Funds that cost .05% more.

[Zek, The Grand Nagus]

Yeah, I'm not using the great bloat of American Funds. Any other ideas?

Ron

[anonymous]

Yet, that great bloat keeps performing well. Anyway, I typically recommend the in-state plan. Regardless, I'm not a big 529 fan and tend to have clients underfund them if they are funding them.

[tpondel]

I use the in-state plans as well. Clients get a tax deduction for it.

Amber

[Zek, The Grand Nagus]

Yes, yes, we all know about the benefits of in-state plans.

Please share with me your preferences for out-of-state plans and why.

Ron

[adam.robinson]

I typically use American Funds, for their investment results and low costs (for actively managed portfolios).

I use Fidelity Advisor for their multiple approaches to portfolio selection (static allocation, target date, single fund). They also work quite well for employers who wish to offer the plan through payroll deduction, and they have a credit card that credits funds directly into the 529 account (not a deciding factor but nice to have for responsible spenders).

I also use John Hancock, where a multi manager platform is important to the client (although this plan is a bit pricey).

Disclaimer: These are NOT the only criteria that are taken into account when I determine the most appropriate plan for a client, just some reasons why I like each.

[Zek, The Grand Nagus]

I have a couple of clients with the Fidelity Advisor card as well, but use the Upromise program for future clients.

Ron

[adam.robinson]

Yeah...I honestly do not get a lot of people interested in the cards, but the Upromise program certainly seems to be more robust.

[jglthree]

I have about 14 clients using the MBNA card tied in with the Fidelity Advisor 529 Plan. The 2% rebate these folks receive goes into the plan at NAV. Many are putting in $300 per quarter via the card with another $100 to $200 per month via bank account debit.

The MBNA card option is no longer offered. It's now an AmEx card with a 1.5% rebate, which is still 50% better than the Citibank/UPromise option.

[Zek, The Grand Nagus]

Anyone do the Babymint / American Century program?

Ron

[Trent]

I recommend Utah or New York, both are managed by Vanguard, expenses are low, portfolio options are adequate and performance has been very good. The downside is you do not get compensated but I have found that I get a lot more business and referrals from clients who know I am more interested in making sure the kids and grandkids have a larger pot of money to fund education goals.

[anonymous]

Trent, why don't you charge a fee for your recommendations? If you are an RR, you won't be able to recommend NY or Utah without selling away issues.

Also, don't recommend NY if any family members might plan on contributing,

[Trent]

I am dual registered RIA/RR and my fees include the management of the 529 plans, I just don't add the 529 "balances" in my AUM fee. Yes, NY is quite cumbersome when it comes to others who might contribute, but we just pool the resources in this 1 particular instance.

[JoeK]

I have used Upromise and at one point it was useful, but as of late it has been worthless. The MBNA Fidelity 529 card is fantastic and I have been able to put away a sizable chunk of money for my business partner's kid.

[no bd for me]

I agree with Trent that Utah is good--low cost and good selection of various asset classes. I just charge an hourly fee to make the recommendation / allocation.

I just learned that West Virginia has DFA funds available in the plan but haven't had a chance to take a close look yet. Anyone use WVA?