If this was the case, why would the (many) states charge a fee?
Reply: I don't necessarily agree with your statement that "many" charge a fee. But I know some do, but there are those that don't---there are those that waive for residents, regular contributions or a certain balance. There may be some states that offset costs of administering their 529 plan with the fee rather than use taxpayer dollars. I seem to have read about this elsewhere on this board and I think states disclose this info now.
I ask this: I DON'T WANT ANSWERS...THESE ARE PURELY RHETORICAL QUESTIONS. Do you think some sort of fee is warranted if your state is doing what it should be doing as the administrator? In other words, if you knew that your state was actively working to ensure that you got a low-cost plan, good customer service, positive returns---let's not debate what is positive :-), quality investment options, providing regular oversight, etc;....would a fee (we won't debate the amount of the fee) of some sort be warranted? If not, why should all taxpayers fund a 529 plan for the state when all taxpayers aren't taking advantage of a 529 or more importantly all taxpayers don't need a 529 plan?
This is the crux of my initial post, don't make generalizations about all states, do your homework the same way you'd do your homework on the investment options/manager. I did, and I am confident that both the states I chose and their investment managers are doing what each should be. (I'd rather not mention the states I chose---don't want to debate specifics...it's up to each individual to choose what's best for him/her).
Also, if this was a concern, why don't they give a tax deduction regardless of which plan is used (and for the entire contribution)?
Reply: Why don't all private businesses provide customers with price matching for products sold by their competitors? I say that partially in jest but somewhat seriously....Not all states even offer a tax deduction for 529s---but why not (or at least those with a state tax system)? The fact is that tax deductions cost the government money...the state/feds can only do what it thinks it can afford to do.
Now, do some governments, on all levels---city, county, state, fed---mismanage revenue....yes.....just like corporations mismanage. This is why voting becomes so important....when you don't have confidence in your administration you vote...sometimes it turns out the way you want it to, but other times not so much.
P.S. I don't think that the states are "bad apples. I just don't think that they particularly care about making school affordable.
Reply: I don't think that all fund managers are "bad apples," I just don't think they particularly care about making investing for college affordable FOR EVERYONE.
As for states, I think some don't care, I think some do care, and I think some care more than others. Again, I just don't think you can make broad generalizations about all states. Of course, we all make broad generalizations about everything else so I'm not surprised to find it here also.
All I'm saying is.....we should make an effort to get the full story and then use that information to make a decision.
Thanks for the good/clean debate. Sometimes the posts tend to go negative very quickly....it is nice to have some thought-provoking discussion with no condescension. Happy New Year and happy posting!