Cortburg Speaks Retirement
Tune in every Wednesday to "Cortburg Speaks Retirement," your go-to podcast for the latest insights on investing, financial planning, and retirement strategies!
Join Certified Retirement Counselor, Miguel Gonzalez, as he delves into timely investment topics, offers expert advice on money management, and addresses common concerns about navigating the stock market.
Cortburg Speaks Retirement
May 29th is National 529 Day!
This week Miguel Gonzalez, CRC, breaks down the advantages of 529 college savings plans, offering essential tips for securing your child's future education and maximizing your financial planning.
Cortburg Speaks Retirement - episode #189: May 29th is Nationwide Celebration of 529 Day
About Cortburg Retirement Advisors, Inc.
Cortburg Retirement Advisors is a full-service, boutique financial planning firm - helping guide clients through turbulent and calm economies. Their goal is to help grow, protect, and preserve their assets from their first job through retirement. Cortburg’s “all in one house” capabilities mean that their experienced team can help with all financial needs - wealth management, estate and tax planning, group retirement, employee benefits, insurance, and retirement planning.
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Welcome to Cortburg Speaks Retirement
An audio podcast about investing in the stock market, financial planning, money management and retirement planning. Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.
Now here is your host, Miguel Gonzalez.
HOST
Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.
As we approach the end of May - May 29th marks the nationwide celebration of 529 Day, an opportunity to highlight the many benefits of 529 college savings plans.
As higher education costs continue to soar, many parents find themselves faced with the nagging question, “Will I have enough money to pay for my child’s college education?” One often overlooked savings option is a state-sponsored 529 plan.
These plans offer great tax benefits, while allowing you to contribute substantially higher sums than other savings alternatives.
529 plans generally come in two forms. The first form – prepaid tuition programs – allows participants to lock in tuition rates at eligible state colleges or universities with a lump-sum investment or monthly installment payments. In some states, a portion of the contract value may also be applied to private or out-of-state schools.
The second form – college savings programs – allows contributions to vary. The full value of the account can be applied at any accredited institution of higher education nationwide. Since 529 plans operate under individual state laws, costs and details vary by state.
Substantial Contributions Allowed
Some states allow you to set aside over $500,000 per beneficiary (with no income limitations or age restrictions), compared to $2,000 annually per beneficiary for a Coverdell Education Savings Account (formerly known as an education IRA).
Tax Benefits
Although contributions are not deductible, earnings in a 529 plan grow federal tax-free and are not taxed when the money is taken out to pay for college. Often times, the 529 account must be open for at least 12 months before any money can be withdrawn, so read the fine print. Further, various states may also offer their own tax breaks.
Special Estate Planning Features
One unique feature of 529 plans is that they allow you to move up to $16,000 out of your estate ($32,000 per couple) annually.
Another unique feature of 529 Plans is that you can make a lump-sum contribution to a 529 plan of up to five times the annual gift tax exclusion ($80,000 in 2022), elect to spread the gift evenly over five years, and completely avoid federal gift tax, provided no other gifts are made to the same beneficiary during the five-year period.
The donor generally retains control of the account and may be assessed a penalty for “nonqualified” withdrawals.
Other Considerations
Professional Management. 529 plans offer a “hands-off” savings approach: Funds invested in the plan are professionally managed.
Penalty for Refunds. You will be subject to a federal 10% penalty on the earnings portion of a nonqualified withdrawal. In addition, the earnings on nonqualified withdrawals are taxed at your tax rate and not the student’s. However, you may be able to avoid a nonqualified withdrawal by rolling over the account to a new beneficiary.
Effect on Financial Aid. Any investment may affect a student’s eligibility for financial aid. Earnings withdrawn from a 529 plan are treated as income to the child and will show up on the following year’s financial aid application. Thus, you may want to reserve 529 funds for use in a student’s later years.
It’s Worth a Look
Keep in mind, there is no guarantee that any investment portfolio will achieve its investment goals. The value of your 529 account will fluctuate as the value of the mutual fund shares in which it invests fluctuates, so that your investment, when it is withdrawn, may be worth more or less than its original cost. Also, be aware that out-of-state plans may have in-state income tax ramifications.
For more complete information on 529 plans, contact a financial professional.
Make sure to visit our website, www.CortburgRetirement.com. Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances. As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.
This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.
DISCLOSURES
Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
CRC conferred by The International Foundation for Retirement Education.
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.
Private Advisor Group, LLC and Cortburg Retirement Advisors, Inc. are separate entities from LPL Financial.
Investing involves risk including possible loss of principal.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
