(US) Where should I open a 529 account - through my state's program, Fidelity, Vanguard...does it matter?

Submitted by tobesjax t3_11dg69o in personalfinance

I want to open a 529 account for my son. I have my own various accounts at Vanguard and Fidelity. I know I could open a 529 through Fidelity. But my state has a program. I wasn't sure where to open it.... I thought I also read that I could open it through a different state's program but I'm not sure if that's correct. is that true?

anyways i have no idea where to open the account. anybody have any advice? thoughts?

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BouncyEgg t1_ja8esw0 wrote

The first question to figure out is:

  • Does my state offer a tax incentive?

If so, then the next question is:

  • What are the details surrounding that tax incentive?
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[deleted] t1_ja8honv wrote

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BouncyEgg t1_ja8i28y wrote

If that's what your State says, then sure.

You haven't revealed enough data for an internet stranger to confirm/deny your conclusion.

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Bangkok_Dangeresque t1_ja8iv6n wrote

That's almost always the case, yes. And it's the main factor you should consider when choosing a plan.

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[deleted] t1_ja8lmpd wrote

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Cruian t1_ja8mupo wrote

You'll need to run the math to see how much of an impact the ER difference would be and compare that to the tax savings (don't forget to consider the tax savings as additional investments).

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Bangkok_Dangeresque t1_ja8mwjf wrote

Can you share which state you're in, your state tax rate, and amount you plan to contribute? It's a math problem of whether the drag from bad investment options/high fees outweighs the tax savings from contributing to the eligible state plan. In most cases, the tax benefits still win.

You should also be aware, you can't just open a "fidelity" 529. Fidelity manages a few state plans (Arizona, Mass, Connecticut, Delaware, and New Hampshire), and for non-residents who still want a fidelity-managed plan, they route them to the NH.

Though even in that plan, you don't get access to the full suite of Fidelity funds. They have a few options for managed portfolios that you can choose.

Same goes for Vanguard plans. They manage New York, Colorado, and Nevada's plans, and route non-residents to their Nevada plan.

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[deleted] t1_ja8n48y wrote

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Bangkok_Dangeresque t1_ja8nifw wrote

The Ohio plan has many Vanguard funds as investment options. Either as the "Vanguard Ohio Target Enrollment Portfolios", or you can just straight up invest in Vanguard US, international, and bond market index funds.

There's really no advantage for you to look elsewhere.

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Longjumping-Nature70 t1_ja9m0wd wrote

Our state was Vanguard, and Fidelity is no better or worse than Vanguard. If you despise the Vanguard then don't worry about the state tax deduction and go with Fidelity.

Some states have BAD ones though. I rate Vanguard and Fidelity run ones as good ones.

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mejelic t1_ja951nu wrote

Do you know what brokerage your state plan is with? Mine for instance is with Fidelity.

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84740296169 t1_ja8djt9 wrote

It only matters if your state gives tax breaks for 529 contributions.

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