While researching the afore mentioned Secure Act 2.0 about a week ago… recall this 4200 page monster was released on December 27th, 2022 …
Some talk in the beast is about unused 529’s being able to roll over into a Roth….
This caught the eye/ear and a note was made. A possible use of this came up this week, so further research is needed as there were a ton of hurdles (like a 15 year waiting period, just to name one) to allow this transaction AND we will likely have updates during the year to clarify this possibility.
With a use already a possibility, we wanted to bring this to your attention and let you know we will be doing further research for clarity! yay
Long Weekend
Monday is a Holiday in honor of Martin Luther King day, as such banks, government offices and our office will be closed as well.
Today is a Friday the 13th spooky … enjoy your day and the weekend…talk next week!
In our continued fun “Back To Basics” Series here we discuss Educational Funding…
Here is one very important item to remember from the post:
Did you notice we put Retirement Planning BEFORE Education planning? Do you recall in Part 3 in Debt Planning we said one of the few good debts are educational related debts ….We of course are not advocating Student debt/loans… but they are available in abundance and again not a bad debt. There are not retirement planning loans…. just saying!
Proxy Vote Reminder
In this post we remind you to please reach out if you have fallen off the list for us to proxy vote for you!
If you are getting those pesky Proxy Notices (some can be small books- oh the trees that are destroyed- digressing) reach out to us, we not only vote the Proxies for you, but we get one single notice for everyone, and Jen has done an excellent job in getting a great deal of those electronically…. Did we say how Green this is?
Capital Market Comments
The Slowdown is Here
We first started speaking of the slowdown in our Q 1 2022 Newsletter here in our “Anatomy of a Slowdown” main aricle actually released in December of 2021….
As a reminder this is a high level Financial Planning Education like overview starting with the basics of and we will continue into advanced topics in order of Planning Importance.
Did you notice we put Retirement Planning BEFORE Education planning? Do you recall in Part 3 in Debt Planning we said one of the few good debts are educational related debts ….We of course are not advocating Student debt/loans… but they are available in abundance and again not a bad debt. There are not retirement planning loans…. just saying!
Education Planning
Very similar to the most important parts of retirement planning, education planning carries many of the same qualities but with a few caveats:
Start Early and if you do consider a 529 plan due to the tax free compounding features.
With many states giving you a state income tax bracket break for your 529 contributions … making those states a green light to fund a 529 right up to the years a student is about to attend or is even attending –
Planning Strategy– if you are very near the student using the 529, only fund the amount needed to get the deduction on the state level. Those residing in states where there is no state income tax deductions have far less benefits to the late funding/in and out of 529 state deductible contributions.
Second Planning strategy– late funding plans of any type should be in VERY safe almost emergency funds like asset classes since their use will be so fast.
Third Planning strategy– Do not overfund a 529 as if you do there can be stiff tax penalties for non-educational uses.
Think of educational funds as fast use retirement funds, therefore make sure the allocations are very conservative as the child approaches use age.
Make it easy for Grandparents and others to contribute to an Educational fund, we find other generations very frequently help with Educational Funding since they also know the importance, but may be more set in their retirement funds…
Education Costs are Increasing Fast
Not withstanding the above warning of overfunding a 529 plan, understand that higher education costs are rising very quickly as noted here in detail and be sure to plan accordingly … here is our favorite chart on the Growth of Student Loans:
Attention all parents using 529 funds for college funding, please be careful NOT TO take your spring (2016) distribution this year (2015). While the bill may already be in your mailbox, the IRS frowns upon mismatching of tax years.
Match your Distribution years
We do have known contacts of IRS problems associated with the spring tuition payment being taken out this year – leading to the appearance of a much greater distribution in the current year. Unfortunately many colleges don’t give a great deal of time to pay spring tuition, however the IRS wants us to keep the bills associated with our college funding in the same tax year.
If you’ve received your spring tuition, hold off on taking that 529 distribution until next year. Otherwise the IRS may be at our doorstep! Accidents do happen, and it will not be the end of the world, but if possible dot the i’s and cross the t’s on this one !
Some really neat stuff coming in the next few weeks…but that is later…enjoy your weekend !
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, please consult your financial advisor prior to investing!
Background
The is the vocal portion of J.K. Financial, Inc. a Dallas Texas Based Fee Only Total Wealth Financial Planning Firm. Founded by John Kvale, a Dallas Texas Fee only Financial Planner and Total Wealth Manager.
April 2022 Financial Planning and Capital Market Review – By John Kvale CFA, CFP
Hello and Welcome to our April 2022 … Financial Planning and Capital Market Update!
If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!
Newbies –
We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets thoughts and current events!
Hope you enjoy!
April 2022 Video
YouTube
Financial Planning Tip(s)
Back to Basics Series – Educational Funding
In our continued fun “Back To Basics” Series here we discuss Educational Funding…
Here is one very important item to remember from the post:
Did you notice we put Retirement Planning BEFORE Education planning? Do you recall in Part 3 in Debt Planning we said one of the few good debts are educational related debts ….We of course are not advocating Student debt/loans… but they are available in abundance and again not a bad debt. There are not retirement planning loans…. just saying!
Proxy Vote Reminder
In this post we remind you to please reach out if you have fallen off the list for us to proxy vote for you!
If you are getting those pesky Proxy Notices (some can be small books- oh the trees that are destroyed- digressing) reach out to us, we not only vote the Proxies for you, but we get one single notice for everyone, and Jen has done an excellent job in getting a great deal of those electronically…. Did we say how Green this is?
Capital Market Comments
The Slowdown is Here
We first started speaking of the slowdown in our Q 1 2022 Newsletter here in our “Anatomy of a Slowdown” main aricle actually released in December of 2021….
And then again, here in our Q 2 2022 Newsletter ….
Then again here, here, here, here, and again here.… among a few other times…
Last week the BEA “Officially Released” a negative GDP print as noted here in our post and in this chart….
Never get the timing exactly, but we are not surprised and have been waiving the flag here in our talks and are prepared!
Have a Great Day, Talk to You at the End of May!
John A. Kvale CFA, CFP
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Posted in Audio, Clients/Clients Only, Economy, General Financial Planning, Investing/Financial Planning, Market Comments, Monthly Review, Podcast, Reminder, Video
Tagged 529, Anatomy of a Slowdown, Back to Basics, College Funding, CPI, Proxy Vote, Slowdown