New dad, my head is spining, which way to go?

[bartaholic]

hello all
I have baby girl thats going to be 1 year old in july. we live in Illinois and id like to start 529 for here asap but I have no clue what the best choice is.
So far I understand that I do not have to pick 529 plan from my state and i can transfer to different states . but i do not know how to choose and why some choices are better than other . Id like to give here something to go on into life any help and guidance would be greatly appreciated
thanks

[dopps]

Bright Directions is the way to go; as it is an IL 529 plan, and only an IL 529 plan will give you a deduction on your IL income taxes. The deduction is limited to $10,000 per taxpayer per year (so, assuming you are married, you and your spouse can contribute up to $20,000 per year to Bright Directions and deduct that full amount against your IL taxable income). If you need help establishing one, and want to enlist a broker's help, send me an email.

[kathryn_sfc]

Bright Start is the IL direct-sold college savings program which you can learn more about and open here: https://www.savingforcollege.com/529-plans/illinois

Bright Directions is another plan offered by Illinois, but you will have to go through a financial advisor to open an account.

You don't have to use your home state's plan, but as @dopps mentioned, IL does offer a tax deduction for contributions to an IL plan. You can compare plans here: https://www.savingforcollege.com/compare_529_plans/?820=t

[bartaholic]

Yes I know I can participate in brightstart but ideas wondering if other states 529 plans are better investments? More than likely I will not contribute 10k a year to take advantage of the tax deduction on that, so what ever I contribute tax saving won't be that much so I rather have a plan that will give a better return. I was also thinking if ira would be a better option since that won't be taken into consideration when child applies for financial aid
I just don't know what is the best I investment and return on the money without complicating things down 18yrs from now

[dopps]

IRA? Heck no, unless you want to pay taxes and possibly an early withdrawal penalty when you take the money out to pay for college expenses. Don't worry so much about the impact on financial aid, as a 529 is considered a PARENTAL asset (assuming you own the 529), which is thus counted less against FA than a student-owned asset. Tax-free withdrawals for qualified higher education expenses should, in most cases, trump whatever minor negative impact a 529 may have against FA.

Bright Directions has had very good results. Bright Start was recently revamped, which was badly needed as it was poor to mediocre. If you really don't care about state tax deductability, I am a big fan of American Funds (which is advisor sold--yes I am biased, and I am sure others out there will find a direct-sold plan to endorse).