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3) i read that there are state tax benefits from CA from link below.
what are advantages or disadv in investing in CA or outside of CA ?


3) You should use California's "Scholarshare" as Clark Howard recommends, provided you plan to remain in California. The advantage is that your 529 will accumulate free of federal AND California state income taxes. If you went with a good out-of-state plan, for example Utah's UESP, you could save on expenses, but that savings would be more than offset by losses to California state income tax. (That assumes we have significant growth within our 529's -- knock on wood!)

Not quite right.

1. No matter which state's plan you use, earnings will accumulate free of federal and California state income taxes. You will not pay taxes on your 529 money until you withdraw the money from the plan.

2. California law exempts qualified distributions from California and non-California 529 plans via conformity to the federal tax exclusion. (

3. You can roll money from one state's plan to another (once per year, I think?), and you can have money in planse from multiple states. So choosing a plan now will not prevent you from taking advantages of incentives from another state that you eventually move to.

Bottom line: The tax advantage for using your state's plan is usually in the form of a state tax deduction for your contributions. California doesn't offer this. So from a tax perspective, it doesn't matter what plan a California resident invests in. You can choose based on investment options, fees and expenses, fund manager, affiliation with UPromise, contribution minimums and maximums, or whatever other criteria is important to you.

- Parkway
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