529 plans : what every planner needs to know / Nancy E. Shurtz and Alexander B. Fitch, Robert Tirrell.

Format:

Book

Author/Creator:

Shurtz, Nancy, author.

Fitch, Alexander B., author.

Tirrell, Robert, author.

Language:

English

Subjects (All):

529 plans--Law and legislation.

529 plans.

Education savings accounts--Law and legislation--United States.

Education savings accounts.

Prepaid tuition plans--Law and legislation--United States.

Prepaid tuition plans.

Physical Description:

1 online resource (418 pages)

Place of Publication:

Chicago, Illinois : American Bar Association, [2021]

Summary:

While much of the transfer of wealth comes in the form of inheritance, today inter vivos expenditures for a good education may be even more important than intergenerational transfers at death. This accessible resource focuses on Section 529 plans, comparing and contrasting them with other education planning techniques. The authors identify the need to develop strategies for financing K-12, college, graduate, or professional education, detail the rules by which these goals may be accomplished, and explain how to integrate education planning into an individual's comprehensive paradigm for financial, tax, retirement, and estate planning. Although the book's primary focus is on 529 plans, this accessible resource also provides a thorough introduction to the other education savings vehicles that are available. In addition, the book addresses strategies for financing education when savings prove inadequate, including guidance on financial aid planning. Throughout the text, Planning Pointers address some of the critical planning issues that arise in the education planning context. Invaluable appendices contain various materials--glossary, acronyms, abbreviations, statutes, forms, and other resources--to assist the planner. A roadmap for creating effective strategies for education financing, this guide's clear information and practice tips make this a useful and accessible resource for a broad audience, including estate planners, general practitioners, tax lawyers, accountants, financial planners, trust officers, and financial aid administrators.

Contents:

Intro

Title Page

Copyright Page

Dedication

Contents

Acknowledgments

About the Authors

Preface

PART I WHY PLANNING PAYS

Chapter 1: Education Goals: Constructing a Plan

A. Goals of Education Planning

B. Planning Based on Income Categories

1. Low-Income Families

2. Middle-Income Families

3. High-Income Families

C. Conclusion

Chapter 2: The Benefits and Costs of a Good Education

A. The Benefits of a Good Education

1. The Benefits of K-12 Education

2. The Benefits of a Community College and Other Training Programs

3. The Benefits of College and Graduate Schools

4. Some Reservations

B. The Costs of a Good Education

1. The Costs of Private and Parochial K-12 Education

2. The Costs of Home-Schooling

3. The Costs of Community College and Other Training Programs

4. The Costs of College and Graduate School

Chapter 3: It Is Never Too Late to Save

A. The Importance of Savings

B. Calculating the Needed Savings

C. It Is Never Too Late to Save

D. Conclusion

Chapter 4: The Best Ways to Save

A. The 529 Plan

1. Prepaid Plans and Savings Plans Offer Similar Advantages

2. The Advantages of the Savings Plans over the Prepaid Plans

3. The Advantages of the Prepaid Plans over the Savings Plan

B. When the Client's Goal Includes K-12 Education

C. When the Client Is Eligible for Financial Aid

1. Savings Bonds

2. Insurance

3. Retirement Assets

4. 529s and Coverdells

D. When the Client Has Ample Retirement Assets

1. Traditional IRAs

2. Roth IRAs

E. When the Client Has Property Other Than Cash and Wants to Finance Non-Qualified Education Expenses or Benefit Nonfamily Individuals

1. Real Estate and Investment Assets

2. Business Property

F. Conclusion

Chapter 5: When Savings Are Not Enough.

A. Pay-as-You-Go Techniques

1. Tax Benefits

2. Financial Aid

B. The Impact of Financial Aid and Tax Benefits on the Costs of College

C. Benefits after Graduation When the Student Has Debt

1. Student Loan Interest Deduction

2. Student Loan Forgiveness

3. Section 529 Payment of Loans

PART II SECTION 529 SAVINGS PLANS

Chapter 6: History of Section 529 Savings Plans

A. The Small Business Job Protection Act of 1996

B. The Taxpayer Relief Act of 1997

C. The Economic Growth and Tax Relief Reconciliation Act of 2001

D. The Pension Protection Act of 2006

E. The Small Business and Work Opportunity Act of 2007

F. The Section 529 Regulations of 2008

G. The American Recovery and Reinvestment Act of 2009

H. The Stephen Beck Jr., Achieving a Better Life Experience (ABLE) Act of 2014

I. The Tax Cuts and Jobs Act of 2017

J. The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019

K. The Revolutionizing of 529 Plans

L. Conclusion

Chapter 7: Federal Rules and Regulations for Section 529 Savings Plans

A. The "Creation of the State" Requirement

B. "Contribution (Participation)" Restrictions

1. Contributor/Donor

2. Account Owner

3. Designated Beneficiary

4. Cash Requirement

5. Limitation on Noneducation Purposes

6. Limitation on "Excess Contributions"

7. Separate Accounting Requirement

C. The "No Investment Discretion" Directive

D. The "Not Pledged as Collateral" Rule

E. Used for "Qualified Higher Education Expenses"

F. Used by "Eligible Student"

G. Used at "Eligible Education Institution"

H. Qualified Payment Method

I. Conclusion

Chapter 8: Federal Income Tax Planning with Section 529 Savings Plans

A. Contributions and Earnings

B. Qualified Distributions or Withdrawals.

C. Nonqualified Distributions or Withdrawals

1. Shifting the Tax Burden and the "Kiddie Tax"

2. Taxation of Distribution to Account Owner If Third Party Donations

3. Multiple Accounts

D. Additional Tax (or Penalty) on Nonqualified Distributions

E. Rollovers: Changing the Plan or Beneficiary

1. Changing the Plan

2. Changing the Beneficiary

3. Adverse Consequences from Rollover

F. Recent Changes Impacting Education Planning with 529s

1. Tuition and Fees Deduction

2. Losses in the Account

3. Education That Is an Ordinary and Necessary Business Expense

4. Home Equity Loan Interest

5. Dependency

G. Coordination with Other Education Benefits

H. Conclusion

Chapter 9: Estate Planning with Section 529 Savings Plans

A. Gift Tax

1. The Deemed Completed Gift

2. Gift upon Change in Account Ownership

3. No Gift When Contributor and Beneficiary Are the Same

4. A Present Interest for a Future Distribution

5. The Five-Year Election

6. Excess over Annual Exemption or Five-Year Amount

7. Split Gifts

8. Gift by Beneficiary (or Account Owner)

9. Gift When Owner Is Beneficiary

B. Generation-Skipping Tax (GST)

C. Estate Tax

1. Death of Account Owner

2. Death of Beneficiary

D. Planning for Incapacity of the Owner

E. Planning with Trusts

Chapter 10: State Tax Planning with Section 529 Savings Plans

A. State Tax Deductions or Credits

B. Accumulations

C. Withdrawals or Distributions

D. Tracking Basis When State Law Allows a Deduction

E. Rollovers

F. Gift and Inheritance Tax Issues

G. Conclusion

Chapter 11: Disability Planning with Section 529 Savings Plans

A. History and Directives

B. Establishing an ABLE Account

1. When the Beneficiary Is Unable to Establish the Account

2. Control Issues

3. The One-Account Rule.

C. Contribution Restrictions

1. The State Contribution Limits

2. The Federal Contribution Limits

D. Distributions for Qualified Disability Expenses

E. Coordination with Federal and State Benefit Programs

F. Tax Advantages

1. Federal Income Tax Advantages

2. Federal Gift and GST Advantages

3. Federal Estate Tax Advantages

4. State Tax Advantages

G. Rollovers

H. Planning Options

1. Receptacle for Certain Funds

2. Better Than a Special Needs Trust

Chapter 12: Nontax Aspects of Section 529 Savings Plans

A. Control

1. The Owner's Control

2. The Beneficiary's Control

B. Perpetuity

C. Asset Protection

1. State Law and Plan Protection

2. Federal Law

3. Medicaid

D. Financial Aid

E. Easy to Set Up

F. Good Investment

Chapter 13: Investment Planning with Section 529 Savings Plans

A. Investment Performance and Options

1. Age-Based

2. Equity or Growth Portfolios

3. Secure Income

4. Index Funds

5. Other Investments

6. Broker/Advisor Sold

7. Rollovers

B. Some of the Best 529 Plans

C. Fund Scandals and Market Uncertainties

Chapter 14: Choosing the Right Section 529 Savings Plan

A. Residency Restrictions

B. State Tax Considerations

C. Investment Fees

1. The Initial Enrollment or Application Fee

2. Annual Account Maintenance Fees

3. The Annual Management or Mutual Fund Fee

4. The Broker Fee

5. Other Fees

D. Account Ownership and Beneficiary Limitations

E. Contribution and Withdrawal Restrictions

1. Minimum Initial Contributions

2. Funding Limits/Maximum Contributions

3. Withdrawal Restrictions

4. Other Factors

F. Participation in Retail Rebate Programs

1. Upromise Inc.

2. Other Rebate Programs

G. Customer Services

H. Rankings of the Plans.

1. Morningstar

2. Savings for College

3. Kiplinger

PART III Prepaid Tuition Plans

Chapter 15: The State Prepaid Plan

A. Prepaid Plans-History and Current Status

B. Types of State Prepaid Tuition Plans

1. Residency or Ownership Restrictions

2. Limited Enrollment Periods

3. Transferability Issues

4. Return on Investment and Low Risk

5. Security and Solvency Issues

6. Financial Aid

7. Control, Perpetuity, and Other Nontax Considerations

C. The Best State Prepaid Plans

1. Florida State's Prepaid Plan

2. Washington State's Prepaid Plan

D. Which Is Better? State Prepaid Plans or the Institutional Prepaid Plan?

E. Conclusion

Chapter 16: The Prepaid Institutional Plan

A. Features of the Institutional Plans

1. Residency and Transferability

2. Tax Considerations

3. Return on Investment and Costs

4. Other Nontax Considerations

B. Conclusion

PART IV Coordinating Section 529 Plans with Other Education Planning Techniques

Chapter 17: Coordinating Section 529 Plans with Other Savings Techniques

A. The Cash Contribution Restriction

1. The Custodianship Account

2. The Trust

3. The Limited Partnership or Limited Liability Corporation

B. Qualified Family Member

C. Different Qualifying Expenses

D. Coordination of Savings Techniques

1. Maximizing Qualifying Expenses

2. Avoiding Double Counting

E. Conversions into Section 529 Savings Plans

1. Custodianship Accounts

2. Coverdell Accounts

3. Savings Bonds

Chapter 18: Coordinating Section 529 Plans with Tax Benefits

A. General Coordination Rules

1. Different Definitions of Qualified Expenditures

2. No Double Counting of Qualified Expenses

3. Double Counting Is Sometimes Allowed

4. Different Qualifying Taxpayers

5. Eligible Educational Institution.

6. Per Student vs. Per Return.

Notes:

Includes index.

Description based on print version record.

ISBN:

1-64105-955-9