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I've spent a few hours trying to figure out which state to use for a 529 for my child's college.

What I would really like is "What's the best state for me to choose?", but I'll settle for "How can I choose the best state?"

The main things I'm having trouble with are expense ratio, projected performance, and other expenses.

It seems like low expense ratio is good and then match that against projected performance, but there are just a lot of moving parts to it and I can't wrap my head around it.

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The first thing to consider is state income taxes. Some (many/most) states give a state income tax break for contributions to their 529 plan. Some states allow the deduction even if the 529 plan is run by another state or even a non-state plan.

PA is one of the states that only give a tax break for contributing to the state plan:

Why Choose a Pennsylvania 529?

As a Pennsylvania resident, you get special treatment. Not only are your contributions deductible from your Pennsylvania state income tax, the entire value of your account is exempt from Pennsylvania inheritance tax.* Assets held in a PA 529 plan are not counted when determining state financial aid for college. Assets in any other state 529 plan are counted. PA 529 assets are also protected from creditors in Pennsylvania. Assets in out-of-state plans are not protected.

The benefits for your state plan generally outweigh going to another state plan, and skipping those benefits.

  • If pa state tax is about 3%, wouldn't a state plan that performs better by at least 3% be worth considering? – goodguy5 Jul 29 '20 at 21:26

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