Page 2 - Lakewood Village Real Estate Edge May 2019

investing in education
YOUR MONEY

IS YOUR ADVISER STEERING YOU

INTO A FEE-HEAVY 529 PLAN?

by Janet Kidd Stewart should get a thoughtful plan on how
risky an education-savings portfolio
etirement savers with kids “Make sure you’re should be given the time horizon and
should pay attention to a how best to make changes as the goal
LAKEWOOD R new crackdown on brokers getting your money’s gets close.
“529 plan brokers should have
who sell college savings plans.
VILLAGE advisers and firms to self-report their worth by getting discussions with investors about what
Regulators are inviting investment
plan to use, who is the beneficiary
REAL ESTATE EDGE sales practices after regulatory reviews and how it will be used,” said Licht,
Publisher found a substantial number of cases a former FINRA official. “It’s only
Allison Van Wig in which investors weren’t told about a considered opinion with a fulsome discussion of all these
CA DRE #00985700 varying fees associated with the plans. factors that an investor can make a
Firms have until the end of April sound decision.”
to declare participation, and detailed on the best And by the way, you may be
reports on their sales practices are paying for advice on these plans in
due in May to the Financial Industry other ways. Some advisers include
Regulatory Authority, or FINRA. withdrawal strategy.” these plans in the overall assets
Firms who enroll in the voluntary under management fees they charge,
4435 E Village Rd program are promised a more lenient which is separate from the share-class
Long Beach, CA 90808 restitution than if they are later found a Chicago attorney who represents savingforcollege.com. And with the issue FINRA is dealing with in the
in violation. investors in securities cases. “Firms new ability to use 529 funds for K-12 initiative.
562-882-1581 This is particularly timely have often recommended the pricier tuition, more people will likely be If you have 529 plans worth
Allison@superbroker.com because the Tax Cuts and Jobs Act option that isn’t in the best interest of parking funds for a much shorter $100,000 and work with a financial
www.SuperBroker.com of 2017 opened up 529 education the plan holder.” time, making hefty front-end loads all adviser who charges 1 percent per
savings plans to allow distributions Even if the share-class loads the more egregious, he said. year, that’s $1,000 annually you’re
for kindergarten through 12th grade are properly disclosed, the person “Investors may do everything with paying to have that person watch over
tuition. recommending the plans may not their advisers, but in some cases, they the funds. That could be a bargain
With the change, it becomes be required to tell investors that a may be better off (in direct-sold state if you feel you need custom advice
even more important for savers to no-load plan may be available in plans) because lower fees are the key to that fits with your other investments,
understand fees associated with these their home state that offers tax breaks maximizing returns,” Kantrowitz said. or it could be a waste of money if a
programs. Class A shares, for example, the broker-sold plan doesn’t have, If you do choose to work with an low-cost, age-based option is available
typically involve an up-front sales Stoltmann said. adviser, make sure you’re getting your in your state plan. The key is to
6425 Busch Blvd.,
Columbus, OH 43229 charge, or load, while class C shares And that’s where your retirement money’s worth by getting a considered consider what advice you want and
877.872.3080 often involve ongoing annual loads. comes in. Every penny in fees on a opinion on the best withdrawal how long you’ll pay for it, and choose
www.DiscoverPubs.com
So, for example, someone planning to college savings plans is a penny less strategy when you start taking out the accordingly.
Sudoku, Scrabble, Crossword save for many years for a young child’s that goes into the 401(k), IRA or money, said Susan Licht, a financial And that’s pretty much like
and articles distributed by eventual college expenses might be other retirement savings vehicle. services group partner with law firm retirement advice, too. n
Tribune News Services and better off with class A shares. Always ask your adviser if he or KattenMuchinRosenman LLP.
Brandpoint where noted. “They are amazing plans and have she is being paid a commission to Just as you expect your adviser ©2019 Tribune Content Agency,
© Copyright 2019 by
Discover Publications, Inc. been expanded, but there have been recommend a particular plan, said to recommend the most tax-efficient LLC Distributed by Tribune Content
All rights reserved. abuses,” said Andrew Stoltmann, Mark Kantrowitz, publisher of way to tap retirement accounts, you Agency, LLC

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