Resolutions for 2014 for Financial Planners

Financial Professional Content Last month I posted an article directed to parents of college-bound children on Savingforcollege.com, entitled "6 college-savings resolutions for 2014." In this edition of the 529 Pro Update, I am offering up 6 resolutions for 2014 directed to financial planners. These suggestions will not only help your clients, but most likely will help you attract new clients. 1. Review your clients' current 529 investment choices. With the flip of the calendar page to a new year comes the renewed opportunity for your clients to utilize their one-time-per-year investment change. Are you (and they) satisfied with their current investment mix of equities, bonds, and money market funds? Is it time to shift part of their 529 portfolio to the "alternative" asset classes now found in many 529 plans? You may even decide it's better to roll over to a different 529 plan altogether, but first make sure the beneficiary has not been subject to a rollover within the prior 12 months. Also check for possible state tax recapture on rollovers. Remember to consider your clients' non-529 investment portfolios when recommending investment options within their 529 plans. It often makes sense to divvy up asset classes based on the relative tax advantages of the savings vehicles being used. Also remember that a technique exists for eliminating the restrictions on how often an investment change or rollover can take place with 529 assets. It involves a simple change of beneficiary, as described here. 2. Learn more about 529 plans. Make it your goal to spend a little more time this year learning about 529 plans and the income tax, estate tax, and financial-aid rules surrounding them. You can accomplish this by thoroughly reviewing 529 plan disclosure statements and attending seminars and webinars. My book "The Best Way to Save for College ï ¿ ½ A Complete Guide to 529 Plans" is still one of the most comprehensive and useful texts covering all aspects of 529 plans along with other alternative college-savings vehicles. And for those of you with subscription access to our premium content on Savingforcollege.com please note that we now include several Continuing Education courses as part of the package. 3. Learn more about financial aid. No question is asked more often than the question concerning the impact of 529 plans on a student's financial-aid eligibility. To establish yourself as a true college-investments professional you must have a decent working knowledge of the financial-aid process and "Expected Family Contribution." We offer plenty of guidance in my book and on our website concerning 529 plans and financial aid, including the often-misunderstood treatment of grandparent-owned 529 plans. Many other websites contain valuable financial-aid information, especially the publications made available through the Department of Education's website at www.ed.gov. 4. Tap your "human" resources If you look for them, you will find other professionals willing and able to help you handle the college-savings portion of your practice. Your home office may have specialists available to help with your cases and point you to helpful tools and marketing materials. Beyond the home office, 529 product wholesalers are a tremendous source of information, as are the call centers maintained by 529 plan distributors. There is no need to go it alone. You can save time and be more effective by tapping your network of knowledgeable professionals. 5. Initiate the "extended family" educational plan. Are you looking to expand your business? If so, 529 plans can be a tremendous client-recruiting tool. Simply offer your assistance to your parent-clients in getting the grandparents involved in funding college education for their grandchildren. If your offer is acceptedï ¿ ½voila!ï ¿ ½you now have access to the grandparents and in position to help them with other financial goals as well as college. On the flip side, you may already be working with grandparents interested in establishing 529 accounts for their grandchildren. Suggest that the parents be brought into the loopï ¿ ½after all, the parents are the ones ultimately responsible for the college bills, and coordination between parents and grandparents is sometimes critically important. This provides you with the opportunity to meet the parents and establish yourself as a trusted professional. 6. Open your own 529. There's no better way to learn about 529 plans than to have a little of your own skin in the game. If you have not already established your own 529 accounts, consider opening one in 2014. Even if you have no children, or your children are already through college, beneficiaries in the form of grandchildren and great-grandchildren may eventually enter the picture. You can open the account now by naming yourself as beneficiary. What's the worst that can happen? Even if the money can never be used for college, and is eventually withdrawn for non-qualified purposes, you will have deferred the taxes on account earnings. Sure, the 10-percent penalty tax is an added cost, but remember, the penalty is only on the earnings portion of the withdrawal. Happy New Year! Financial Professional Content Last month I posted an article directed to parents of college-bound children on Savingforcollege.com, entitled "6 college-savings resolutions for 2014." In this edition of the 529 Pro Update, I am offering up 6 resolutions for 2014 directed to financial planners. These suggestions will not only help your clients, but most likely will help you attract new clients. 1. Review your clients' current 529 investment choices. With the flip of the calendar page to a new year comes the renewed opportunity for your clients to utilize their one-time-per-year investment change. Are you (and they) satisfied with their current investment mix of equities, bonds, and money market funds? Is it time to shift part of their 529 portfolio to the "alternative" asset classes now found in many 529 plans? You may even decide it's better to roll over to a different 529 plan altogether, but first make sure the beneficiary has not been subject to a rollover within the prior 12 months. Also check for possible state tax recapture on rollovers. Remember to consider your clients' non-529 investment portfolios when recommending investment options within their 529 plans. It often makes sense to divvy up asset classes based on the relative tax advantages of the savings vehicles being used. Also remember that a technique exists for eliminating the restrictions on how often an investment change or rollover can take place with 529 assets. It involves a simple change of beneficiary, as described here. 2. Learn more about 529 plans. Make it your goal to spend a little more time this year learning about 529 plans and the income tax, estate tax, and financial-aid rules surrounding them. You can accomplish this by thoroughly reviewing 529 plan disclosure statements and attending seminars and webinars. My book "The Best Way to Save for College ï ¿ ½ A Complete Guide to 529 Plans" is still one of the most comprehensive and useful texts covering all aspects of 529 plans along with other alternative college-savings vehicles. And for those of you with subscription access to our premium content on Savingforcollege.com please note that we now include several Continuing Education courses as part of the package. 3. Learn more about financial aid. No question is asked more often than the question concerning the impact of 529 plans on a student's financial-aid eligibility. To establish yourself as a true college-investments professional you must have a decent working knowledge of the financial-aid process and "Expected Family Contribution." We offer plenty of guidance in my book and on our website concerning 529 plans and financial aid, including the often-misunderstood treatment of grandparent-owned 529 plans. Many other websites contain valuable financial-aid information, especially the publications made available through the Department of Education's website at www.ed.gov. 4. Tap your "human" resources If you look for them, you will find other professionals willing and able to help you handle the college-savings portion of your practice. Your home office may have specialists available to help with your cases and point you to helpful tools and marketing materials. Beyond the home office, 529 product wholesalers are a tremendous source of information, as are the call centers maintained by 529 plan distributors. There is no need to go it alone. You can save time and be more effective by tapping your network of knowledgeable professionals. 5. Initiate the "extended family" educational plan. Are you looking to expand your business? If so, 529 plans can be a tremendous client-recruiting tool. Simply offer your assistance to your parent-clients in getting the grandparents involved in funding college education for their grandchildren. If your offer is acceptedï ¿ ½voila!ï ¿ ½you now have access to the grandparents and in position to help them with other financial goals as well as college. On the flip side, you may already be working with grandparents interested in establishing 529 accounts for their grandchildren. Suggest that the parents be brought into the loopï ¿ ½after all, the parents are the ones ultimately responsible for the college bills, and coordination between parents and grandparents is sometimes critically important. This provides you with the opportunity to meet the parents and establish yourself as a trusted professional. 6. Open your own 529. There's no better way to learn about 529 plans than to have a little of your own skin in the game. If you have not already established your own 529 accounts, consider opening one in 2014. Even if you have no children, or your children are already through college, beneficiaries in the form of grandchildren and great-grandchildren may eventually enter the picture. You can open the account now by naming yourself as beneficiary. What's the worst that can happen? Even if the money can never be used for college, and is eventually withdrawn for non-qualified purposes, you will have deferred the taxes on account earnings. Sure, the 10-percent penalty tax is an added cost, but remember, the penalty is only on the earnings portion of the withdrawal. Happy New Year!