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START Program
Posted on 11/19/19 at 8:06 pm
Posted on 11/19/19 at 8:06 pm
I was originally trying to search the money board to read previous threads discussing the Louisiana START program.
However, I accidentally started an entirely new post. Feel free to discuss the pros, cons, and differences between the START and the K12Start.
However, I accidentally started an entirely new post. Feel free to discuss the pros, cons, and differences between the START and the K12Start.
This post was edited on 11/19/19 at 8:14 pm
6
Posted on 11/19/19 at 10:25 pm to glaceau
It's a great program. Tax free growth, and you can deduct contributions up to $4,800 per kid per year from your state taxes.
Posted on 11/20/19 at 12:28 am to glaceau
I started one last year for our child. Mainly for the tax deferral and free growth but I have some suspicions the LA program is not functioning properly. I will have to post my dates and buys but as of a 12-13 months my “gains” are like $20. Every month $100 is contributed to the total stock market fund. I have a hard time imagining the gains are so minimal when my ira is like 15X that ROR.
And of course their statements are like an elementary school report card. Anybody else have similar “issues”?
And of course their statements are like an elementary school report card. Anybody else have similar “issues”?
Posted on 11/20/19 at 9:48 am to glaceau
My response from another thread on the topic:
The LA START program is a really good 529 program. It's about as low of fees as you can get as it uses primarily passive Vanguard funds. I would suggest using that if you are going to do it yourself, particularly because of some of the other incentives.
The only other 529 plan that might merit consideration would be Virginia's plan that uses American Funds, which are relatively low cost actively managed funds. Historically, they have slightly outperformed Vanguard net of fees, but both Vanguard and American Funds are a few hundred basis points above the rest of the pack.
The LA START program is a really good 529 program. It's about as low of fees as you can get as it uses primarily passive Vanguard funds. I would suggest using that if you are going to do it yourself, particularly because of some of the other incentives.
The only other 529 plan that might merit consideration would be Virginia's plan that uses American Funds, which are relatively low cost actively managed funds. Historically, they have slightly outperformed Vanguard net of fees, but both Vanguard and American Funds are a few hundred basis points above the rest of the pack.
This post was edited on 11/20/19 at 9:49 am
Posted on 11/20/19 at 11:04 am to glaceau
Really love the traditional START. Not a huge fan of the K12Start. Main reason is you don't get the tax deduction or earnings enhancement on the K-12 version.
Without those two, and being a significantly shorter time frame, the benefits over managing just a brokerage account are greatly reduced. At least in a brokerage account, with a short time frame, if you have losses you can write them off. In K-12 Start, you just lost the money with no benefit.
Without those two, and being a significantly shorter time frame, the benefits over managing just a brokerage account are greatly reduced. At least in a brokerage account, with a short time frame, if you have losses you can write them off. In K-12 Start, you just lost the money with no benefit.
Posted on 11/21/19 at 1:54 pm to glaceau
Posted on 11/21/19 at 2:04 pm to UpstairsComputer
quote:the tax-deferral and low cost, high-quality investments are still a great benefit. especially if someone has 10+ years until say, freshman year. I look at it as a way to save for 4 years of high school, rather than all of private school. To your point about tax-loss harvesting, I'd be curious to see the benefit of tax-loss harvesting versus tax-deferral over time.
response to upstairscomputer
This post was edited on 11/21/19 at 2:05 pm
Posted on 11/21/19 at 4:33 pm to glaceau
2 general questions for those who know a lot about the program...
(1) - are the AGI ranges for earnings enhancements for single filers or joint or both? Seems like they would list AGI ranges for different filing statuses, but maybe I'm missing something
(2) - assuming your AGI > 100k, the earnings enhancement is limited to 2%. your contribution is tax deductible for state taxes only, and your earnings are tax free (if spent on a qualified expense). It just seems like it isn't a ton of skin in the game for high earners to lock up cash like this. am i being short-sighted? it seems that if the question was max out 401k vs this, you'd go to 401k, right??
(1) - are the AGI ranges for earnings enhancements for single filers or joint or both? Seems like they would list AGI ranges for different filing statuses, but maybe I'm missing something
(2) - assuming your AGI > 100k, the earnings enhancement is limited to 2%. your contribution is tax deductible for state taxes only, and your earnings are tax free (if spent on a qualified expense). It just seems like it isn't a ton of skin in the game for high earners to lock up cash like this. am i being short-sighted? it seems that if the question was max out 401k vs this, you'd go to 401k, right??
Posted on 11/21/19 at 5:04 pm to GEAUXT
Start Program for college, can you use the funds within months of deposit?
Posted on 11/21/19 at 9:39 pm to bayoubullish
quote:
if someone has 10+ years
Fair point. Where I was going is the ability to take tax losses on NQ funds - while not completely outpacing the tax free gains - greatly reduces how much it beats it by. It takes away the "no brainer" part for me that the regular START program is.
In a perfect world, you'd do an apples to apples comparison with similar funds - which are indexes and have very low turnover and essentially tax deferral until the capital gains at the end...
Posted on 11/21/19 at 9:48 pm to kennypowers816
1) Agreed but that's how I've always read it too.
2) Think of it like this 2% + 4% (just example) = 6%. That 6% is what you're ahead of just investing on your own since it comes out tax free.
For part two of this question, this is a very individual specific question. It would depend on whether your goal was fund retirement (are you behind and need to max out?) or education (did you have student loans and not want your kids to have them?). Or any number of other personally specific questions. Is the 19k a finite amount - are they mutually exclusive? Can't do both, etc?
2) Think of it like this 2% + 4% (just example) = 6%. That 6% is what you're ahead of just investing on your own since it comes out tax free.
For part two of this question, this is a very individual specific question. It would depend on whether your goal was fund retirement (are you behind and need to max out?) or education (did you have student loans and not want your kids to have them?). Or any number of other personally specific questions. Is the 19k a finite amount - are they mutually exclusive? Can't do both, etc?
Posted on 11/21/19 at 9:49 pm to TigerintheNO
I've made deposits and pulled them out the day the check cleared. Yes. (and gotten my 2% match and my state tax deduction)
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