For more info on 529’s:
www.savingforcollege.com
www.morningstar.com/articles/1006084/the-top-529-college-sav…
You don’t have to select a program run by the state where either you or the beneficiary resides. Of course, some states allow some contributions to be tax deductible, and of those, some limit deductibility eligibility to the program run by the state of the taxpayer’s residence. But IMO the quality of the 529 program overrides the nominal benefit of a break on state taxes.
For my grandson, I chose Illinois’s Bright Start program www.brightstart.com and within that, selected the Vanguard Total Stock Market Index. Since he’s a baby, I figured it would be good to invest aggressively for awhile, and maybe seque to more conservative as his college years approach.
I’m not entirely happy with it. I wanted to set up automatic recurring contributions, but I can’t do that online. I’d have to mail in a form with a medallion signature (not just notarized); and later, if I wanted to make any changes, I’d also have to do that by mail. So I have my online calendar email me a reminder each month, and I send a contribution then. Luckily, at least I can do (non-recurring) contributions online, I don’t have to mail a physical check.
I didn’t open it in my own name. I figured that by the time Sweetums is in college, I’ll be lucky if I’m competent to handle my own finances; I certainly don’t want to be involved in anyone else’s. So I gave my son some seed money to set it up, with him (the parent) as owner; and he sent me a link that I can use to make contributions. If DS wants to move the 529 to a different program (there are other good ones), or move to a different fund within the existing 529, he can do that. Obviously, I trust he won’t embezzle from his son.
For FAFSA, parent-owned 529’s count, whereas grandparent-owned ones don’t, so this is not the most beneficial arrangement in terms of financial aid. However, I found when my own children were in college, financial aid is most often in the form of loans, and the whole purpose of funding a 529 is to avoid or at least minimize student loans. Grants are typically merit-based, not need-based, so FAFSA doesn’t affect those.
Congrats, and good luck!