Financial Perspectives – Summer 2011
A Crash Course in 529 Plans
Summer is finally here. But with back-to-school time around the corner, many parents and grandparents are thinking about rising tuition costs looming in the not-too-distant future.
One approach to addressing the cost of education involves 529 savings plans. These plans typically are invested in mutual funds and provide favorable tax treatment on a federal and sometimes state tax level as an incentive to save for future school expenses. They work much like Roth IRAs – contributions invested into 529 plans grow tax-deferred, and distributions to pay for the beneficiary’s education are free from federal tax and in most cases state income taxes.
There are also no age or income limits, and the amount you can contribute to these accounts is quite high, often in excess of $300,000*. If there is money left over after the beneficiary goes to college, it’s not as if the money will be forfeited. A 529 can be kept indefinitely and even used for future generations. As a result, 529 plans can be a smart strategy to help pay for future education costs.
If junior gets a scholarship, in most circumstances you can change the beneficiary of the plan without penalty. Further, for many 529 plans, you can be both owner and beneficiary. So if you decide to go back to school, you can establish a 529 plan and use the funds for tuition, fees, books and supplies for any eligible education institution, including many vocational and foreign schools. You even might be able to use your 529 plan for art or cooking classes in Europe.
Paying for college or continuing adult education is rarely easy, but there are many strategies to consider. Your advisor can help you navigate some of the nuances of these 529 plans, and together you can compare them to other alternatives.
Survey Says: Raymond James Advisors are Equipped and Able to Meet the Needs of Clients
We work hard to ensure Raymond James advisors have the resources and support to provide high-quality client service. And surveys show we’re succeeding.
First, according to a survey published in Fortune magazine’s March 21 edition, Raymond James was ranked among the world’s most admired companies. The survey included companies in 32 countries. Out of the 350 firms on the list, we ranked fourth among nine securities industry firms. Attributes judged included quality of management, social responsibility, quality of products or services, and financial soundness.
In May, for the third time in four years, we were named the best full-service broker in the 2011 SmartMoney Annual Broker Survey. The magazine reports it weighed data on the performance of stocks recommended, reviewed studies on customer satisfaction, and talked to experts who study critical intangibles like the user-friendliness of account statements and websites.
SmartMoney does not endorse any product or service of Raymond James. Past performance may not be indicative of future results.
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Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. are wholly owned subsidiaries of Raymond James Financial, Inc. (NYSE-RJF).
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