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MI 529 misaves or Vanguard?

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  • MI 529 misaves or Vanguard?

    Quick question that I can't find the answer to.

    I'm a Michigan resident. I registered my daughter for a 529 account at misaves.com

    In order to get the state tax deduction, I have to use the MESP or other Michigan-specific plans right? I assumed the Vanguard (and I think Fidelity?) options were if I lived in a state that didn't have a 529 benefit.


  • #2
    I believe that is correct.

    It also helps that Michigan has one of the best state 529 plans.

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    • #3
      Originally posted by LazerBeams View Post

      In order to get the state tax deduction, I have to use the MESP or other Michigan-specific plans right?
      Yes. State deduction up to $10k/year.

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      • #4
        Thanks for confirming. I thought that was the case, but family keep casting doubts. This'll be my first year with a 529 so haven't had the opportunity to use the deduction yet.

        I guess, if I were to use Vanguard/Fidelity, everything would still grow tax free/come out tax free for education I'd just miss the $425 contribution deduction each year

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        • #5
          Originally posted by LazerBeams View Post
          Quick question that I can't find the answer to.

          I'm a Michigan resident. I registered my daughter for a 529 account at misaves.com

          In order to get the state tax deduction, I have to use the MESP or other Michigan-specific plans right? I assumed the Vanguard (and I think Fidelity?) options were if I lived in a state that didn't have a 529 benefit.
          VG options will work for states that allow you to take the state tax deduction no matter where the 529 plan resides.

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          • #6
            Originally posted by LazerBeams View Post
            Thanks for confirming. I thought that was the case, but family keep casting doubts. This'll be my first year with a 529 so haven't had the opportunity to use the deduction yet.

            I guess, if I were to use Vanguard/Fidelity, everything would still grow tax free/come out tax free for education I'd just miss the $425 contribution deduction each year
            From the Vanguard website: "Michigan offers residents and taxpayers a state tax benefit only if you invest in the Michigan 529 plan. You could also consider The Vanguard 529 College Savings Plan. While you won't receive the state tax benefit, you will have the advantage of Vanguard's low costs and a wide range of investment options."

            I would consider carefully before passing on the state tax deduction. Think of it as an immediate 4.25% return on your investment. It's hard for me to imagine the fees and investment options at Vanguard or Fidelity are worth leaving 4.25% on the table. (And for what it's worth, the fees and fund choices in MESP are pretty good. Again, it's one of the best state-run plans out there.)

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            • #7
              Definitely go with MIsaves. Put in $10,000 and save $425 per year on your state income taxes. The funds offered by TIAA have very low expense ratios -- not quite Vanguard-low, but not too far off. [Edited to reflect $10k aggregate]

              I've been invested in the MESP for 12+ years.
              Last edited by PhysicianOnFIRE; 11-11-2021, 07:42 PM.

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              • #8
                Originally posted by PhysicianOnFIRE View Post
                Put in $10,000 per kid and save $425 per $10k contribution on your state income taxes.
                Is this true? I was always under the impression its $10k per household/yr, regardless of how may 529s you contribute to

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                • #9
                  Originally posted by 8arclay View Post

                  Is this true? I was always under the impression its $10k per household/yr, regardless of how may 529s you contribute to
                  That was my impression as well. $10k/yr household maximum regardless of number of 529s.

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                  • #10
                    Originally posted by SpacemanSpiff12 View Post

                    That was my impression as well. $10k/yr household maximum regardless of number of 529s.
                    You guys are right. I did $10k per kid per year for a few years when we moved to MN and got a minimal deduction. When in MI, we've typically done $10k total, which is what we do now that we're back in the state.

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