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We paid into the 529 from our old state and got the state income tax break. Now we're in a new state, w/ no income tax, and looking at an annual fee from the 529 now that we're non-residents.

Can we roll the 529 into a coverdell, though it is (barely) over the annual contribution limit? I assume that we can't.

Also, when we changed addresses for our brokerage accounts, they asked if we had any other accounts, 529 or 401k, that we wanted to fold into that firm.

Is there any benefit to a 529-in-a-box from a broker that is not affiliated w/ any state at all? It seems like w/ no income tax here, there is no immediate benefit to choosing any particular 529; the remaining benefit is tax-free growth, so we should shop around mostly for the lowest mgmt fee.
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web-surfing led me to this article, which makes the 529 not affiliated w/ any state seem unapealling:

http://webreprints.djreprints.com/933160497878.html

Seems pretty much like a state 529 or a coverdell is the way to go. We are not likely to add more to the acct for each kid than the coverdell annual limit anyway, so that restriction is not a huge issue. If the grandparents feel the need to kick in beyond that level, we/they could open separate accounts anyway, right?

The 529s I've skimmed seem to have nontrivial maintenance fees (>1%) in their associated funds (as well as potential for annual ownership fees). So that makes a coverdell look best, taking into account that we are in a state w/ no income tax (and apparently with a crappy 529 to boot) and therefore can get no additional benefit from a state 529 beyond the tax break on any growth of investments. And the cool age-adjusted portfolio shifting.

It is possible that if we were to rebalance a coverdell, decreasing equity investment every few years as college looms, just the transaction fees might exceed the higher annual fund fees from the 529s, considering the likely amounts. I will have to check that out a bit. (OK, a simulation showing max coverdell contribution for 18 yrs to funds w/ 0.5% fees but $45 in transaction fees vs $2k to hypothetical 529 w/ 1.5% fees and $25 maintenance fee leads to ~9% advantage to hypothetical coverdell, but still probably only 1 semester's tuition). Doubling transaction fees in 'coverdell' to $90 per year still leaves 6% advantage to 'coverdell' hypothetical situation over similar contribution to hypothetical 529.
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so, another question: is a coverdell like an IRA? Can I contribute $2k for last year by 15 April and attribute it to last year?
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so, another question: is a coverdell like an IRA? Can I contribute $2k for last year by 15 April and attribute it to last year?


No, contributions to coverdell acounts have to be made in the correct calendar year.

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HardyWeinberg writes (in part):

Can I contribute $2k [to a Coverdell] for last year by 15 April and attribute it to last year?

I reply:

You can now. When Coverdell's were first created and called Education IRAs, that was not possible. Then, a 2004 contribution had to be made in 2004. That rule was so silly even Congress realized it, so it's been changed. Contributions for a Coverdell can now be made for the previous year up through the tax filing deadline, without extensions -- in other words, April 15 (unless it's a weekend or holiday). --Bob
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You can now. When Coverdell's were first created and called Education IRAs, that was not possible. Then, a 2004 contribution had to be made in 2004. That rule was so silly even Congress realized it, so it's been changed. Contributions for a Coverdell can now be made for the previous year up through the tax filing deadline, without extensions -- in other words, April 15 (unless it's a weekend or holiday).

I didn't know they changed it. Thanks for posting the correct info.

We sent in our contributions in December to make sure we contributed the full amount to each girl's account.

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