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529 Plan Options

Posted: Fri Feb 18, 2011 11:00 am
by hrux
All,
After researching all my potential options college savings options, although I 'm not thrilled with the investment choices in most 529 plans, I have narrowed my selection to the following two choices and would greatly appreciate any feedback and/or suggestions:

Disclosure:  Illinois resident which now has a 5% state income tax rate and offers a tax deduction for 529 contributions.  However, any funds transferred out of Illinois they have a tax recapture provision.

Option #1
Illinois Bright Start Direct Program
Invest in their Choice Based Portfolio which consists of the following and has a total plan fee of 0.20%:
35% in Vanguard Institutional Index Fund
5% in Vanguard Extended Market Index Fund
10% in Vanguard Developed Markets Index Fund
40% in Vanguard Total Bond Index Fund
10% in Oppenheimer Institutional Money Market Fund

Option #2
Ohio College Advantage Direct Program

They have a few investment choices that I am considering such as:
20% in Vanguard Total US Stock Market (0.25% fees)
5% in Vanguard Developed Market (0.25% fees)
25% in Total Bond Market (0.25% fees)
25% in TIPS (0.28% fees)
25% in Pimco Total Return (0.79% fees)

Again, any advise is appreciated.
Thanks,
Heather

Re: 529 Plan Options

Posted: Fri Feb 18, 2011 9:32 pm
by AdamA
Why not just keep it simple?  50% Vanguard total stock market and 50% Vanguard total bond market and rebalance every year.  Low expense, and you won't be tempted to constantly monkey around with it.