Support our online development, and advance our onground research initiatives in free market economics, as we seek to showcase the brightest Next-Gen minds.
THE ME-P DISCLAIMER: Posts, comments and opinions do not necessarily represent iMBA, Inc., but become our property after submission. Copyright © 2006 to-date. iMBA, Inc allows colleges, universities, medical and financial professionals and related clinics, hospitals and non-profit healthcare organizations to distribute our proprietary essays, photos, videos, audios and other documents; etc. However, please review copyright and usage information for each individual asset before submission to us, and/or placement on your publication or web site. Attestation references, citations and/or back-links are required. All other assets are property of the individual copyright holder.
Understanding Funding Options
[By Lawrence E. Howes; CFP™]
[By Joel B. Javer; CFP™]
Internal Revenue Code Section 529 Plans are for college education funding.
These plans allow assets to grow tax-free if the money is used to pay for qualified higher education expenses. Costs include tuition, room and board, books, and some miscellaneous expenses.
But, there are penalties if the money is not used for qualified higher education expenses.
State Pre-Paid Plans
Some states have what they call pre-paid tuition plans and they vary dramatically from state to state.
Contributions qualify for the $12,000 annual exclusion and the annual gift of $12,000 may be aggregated – X5 years – into one payment of $60,000.
Assessment
However, the right to use the $12,000 gift is eliminated for the subsequent four years.
The maximum amount per beneficiary was $235,000 until recently. The account may be structured so that the proceeds will be part of the child’s estate versus the UTMA where the account is included in the custodian’s estate.
Some states permit contributions to be income tax deductible.
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
- PRACTICES: www.BusinessofMedicalPractice.com
- HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
- CLINICS: http://www.crcpress.com/product/isbn/9781439879900
- ADVISORS: www.CertifiedMedicalPlanner.org
- FINANCE: Financial Planning for Physicians and Advisors
- INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
- Dictionary of Health Economics and Finance
- Dictionary of Health Information Technology and Security
- Dictionary of Health Insurance and Managed Care
Share this:
Filed under: Funding Basics | Tagged: Educational Content |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
College Savings Plans
College Section 529 savings plans, like the rest of the market, have taken a beating lately and have provoked the concern and ire of many parents.
Why:
1. Investors in 529 plans pay at least two or three layers of fees [plan, college, broker].
2. Section 529 plans still offer a limited range of investment choices.
3. You can change investment choices, only once a year, with often confusing options.
4. Colleges consider a 529 account a parental asset for purposes of financial aid. You escape federal taxes only on the account’s growth.
And so, you might want to avoid a 529 plan if:
1. You qualify for a Roth individual retirement account.
2. You haven’t fully funded your own retirement.
3. Your child is close to college age.
4. You are low or middle-income and might qualify for financial aid.
Unfortunately, some medical professionals are finding themselves in this very situation.
-Mary
LikeLike
Section 529 Plans Hurting,
The bear market has obviously hurt college funding Section 529 plans.
That’s why a growing number of parents are turning to prepaid state-sponsored programs that let you pay today’s prices for future education.
But, they too come with strings and states might not be able to keep their promises. So, check it out carefully since every school is different.
Karen
LikeLike
Here is a link regarding the “kiddie tax” and other college funding issues for minors.
http://theincidentaleconomist.com/saving-for-minors/
Brady
LikeLike
Video [How Government Programs Drive-Up College Tuition]
Cho-Lee
LikeLike
More 529
Remember, that although the funds accumulated in a 529 plan are free from federal income tax if used for eligible college expenses – there is an important catch.
If your son or daughter decides not to enter college but to attend a trade school and open a business, the money in the 529, if used to open the business, would be subject to tax and penalty.
Even if your child does attend college, the money could also be subject to state income tax if a non-state plan is used.
Jules
LikeLike
529 College Savings Plans Lag Traditional Mutual Fund Returns
A Morningstar report evaluating 529 college savings plans shows investors keep investing in these plans even as their performance lags.
http://www.fa-mag.com/news/morningstar–529-college-savings-plans-lag-traditional-mutual-funds–performance-14037.html?section=121
Now, much like target-date-funds, why am I not surprised?
Dr. David Edward Marcinko MBA
LikeLike
College Fiscal Stability
About one-third of all colleges and universities in the U.S. are on an unsustainable financial path, according to a 2012 report from consulting firm Bain & Co.
While some of the schools on that list have resources, like a large endowment and a steady enrollment base, that could help them stave off closure – smaller, private colleges “need to be on the lookout,” Jeff Denneen, the leader of Bain’s higher education practice and one of the authors of the report, said in an interview.
Karen
LikeLike