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529 E-ditorials

Our 5.29th-year anniversary
Joe Hurley
Wednesday, June 29th 2005

For obvious reasons, the numbers 5-2-9 have special meaning around our office, and any figure close to "5" is typically rounded to "5.29." So we feel it noteworthy that next month, celebrates its 5.29th year anniversary as an independent business entity.

Over these past 5.29 years, we've followed a multitude of developments in the world of college savings, not the least of which has been the growth of 529 plan assets from less than $7 billion to over $70 billion. While the dollar figures may not have meaning standing alone, they translate into increased college opportunity for millions of families around the country.

We began the company in 1990 because we recognized the Section 529 plan as a powerful incentive and a worthy college-savings vehicle. But there were plenty of rough spots in this new and lightly-regulated investment industry. Our number one goal has been helping people understand and utilize 529 plans. However, we also have worked to improve the programs, providing advice both solicited and unsolicited. Perhaps the best place to get a sense of our thinking is to take a look back at some of our past 529 E-ditorials, first published in 1999 before the legal entity of was formed. If you decide to click through to any of these past columns, please realize that much of the discussion is now out-of-date.

Lobbying for tax exemption

Since their inception, we have believed that 529 plan earnings should remain completely tax-free when used for college. We were pushing for the exclusion before the 2001 Tax Act made it happen (e.g. The number one target ) and more recently have urged our federal and state lawmakers to eliminate the 2010 sunset and make the exclusion permanent (e.g. Call it the twilight zone, The sun will rise again, and Don't let the sun go down on me).

We've advocated other legislative repairs to 529. Some have happened (e.g. The 3 stupid rules of 529 and Say good-bye to the 3 stupid rules). Some have not (e.g. An escape from the financial aid trap).

Occasionally we try to package most of our recommendations into all-inclusive "wish lists" (e.g. Aloha 529 and I'm just the messenger).

Critiquing the 529 plans

We evaluate 529 plans from the perspective of the consumer (after all, I am a 529 consumer, with over 50 accounts spread among 32 states). Sometimes we point out the state-of-the-art plans or those with particularly useful features (e.g. Morphing from prepaid to savings, Privatizing prepaid, and A model 529 plan) and we have had the audacity to suggest that states change how they operate their 529 plans or how they impose their taxes (e.g. It's my money, Don't fence me out, Don't fence me out - Part II, and April Fool's 529).

As you might be able to tell, we do not focus all our attention on the 529 savings plans; in fact, we have a fascination with the vagaries of prepaid tuition plans (e.g. Prepaid plans fighting back, The best prepaid tuition deal in the U.S., and If it sounds too good to be true ). Many prepaid tuition plans are riding a financial roller coaster, and understanding the way they work is a challenge we have accepted.

And lest any college savings program escape our watchful eyes, we roll back the cover of the Coverdell ESA every so often (The Excedrin IRA, Day trading with my Coverdell ESA, The Cover-up Education Savings Account ). Who knew?

Identifying trends

The brief history of the Section 529 plan has been marked by tremendous change and innovation as the states and their outside program managers jockey to present their college savings programs to residents and nonresidents. We try to identify trends early and let you know what to expect in the future. Not only did we provide advance notice that The brokers are coming!, but we reported on the tremendous expansion of investment options (The balance beam effect ), the threat to the states of 529 "federalization" (Taking the S out of QSTP), the introduction of "single-fund" 529 portfolios and risks associated thereto (Whither individual funds?), and the hiring and firing of program managers (The Tiger Woods 529 Plan). Once in a while we just give you a general synopsis on what's happening, or not happening, with 529 plans (529 still rocking and rolling, Perspectives on the 529 debate).

Advice to college savers

And last, but certainly not least, we give you lots of advice so you can utilize the benefits of college savings plans to the fullest. The list of articles is long. Here is a sample:
Don't forget gift tax returns
Should you be waiting?
Grandparents and 529 plans
Run, don't walk, to get this tax benefit
529 and Medicaid
Loading the 529 gift barrel
The gift of education
The state of your state
Making the right year-end moves
Think again, 529 naysayer
An annual exclusion is a terrible thing to waste

So what can you expect from over the next 5.29 years? Even better things-at least that is what we are striving for. Thanks for your continuing support.

» 05-4: The 529 marshals have arrived - 08/30/05
» Our 5.29th-year anniversary - 06/29/05
» 05-2: 529s and the new Bankruptcy Act - 04/28/05
» 05-1: Reform or Deform? - 02/27/05
» 04-6: Perspectives on the 529 debate - 12/28/04
» Show All Archives


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