We are in Illinois, and were just reading about the Illinois Brightstart 529 plan.
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if there are any contriobutors of this plan,and why you might have chose it over other plans...529 plan - Illinois Brightstart
Dec 29, 2006
4 Replies
The fees are pretty high -- 0.99% with another +0.35% possible if the portfolio manager decides to invest in funds they don't have official relationships with. By comparison, the lowest fee charged is OH's plan at 0.25%-0.35%. On the otherhand, you get a IL income tax deduction. I see IL has a flat 3% tax.
What makes a bigger difference? Running numbers...[crunch crunch crunch]...my spreadsheet says assuming both plans return an average of
10% before expenses, the IL tax deduction will make a bigger difference if your timeframe is 10 years or less. 11+ years, the expense ratio becomes a larger impact on return. The IL plan starts at a 2.36% advantage at year 1 and slowly decreases to 0 over ten years. At that point, the OH plan goes up pretty fast -- up to +14% at year 18.P.Schuman wrote:
I had run across this article while doing a search for the plan info -
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sure what it will look like,or how it will relate to the current .99% management fee.I did have to pull up and read thru their "doc" to find the fee infoas the doc is dated June 2006,
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the fee info was not posted as a general tab on the website.
That was the reason for the column. In early 2007, BrightStart fees will become the lowest in the nation -- with index fund alternatives at .17 basis points, and nothing higher than .65 all-in. Of course if purchased through a broker there is at least a 3.5% load, so my new column recommends going directly to the website at
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to get the very lowest prices. The funds will now be managed by Oppenheimer (again this switchover in early Jan,with the option to moving into age-based index portfolios) and there will be a wider choice, and all funds are at least 4-5 start Morningstar funds. So I highly recommend this program, especially for Il residents who get a tax break. Terry
Terry Savage
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