HoweEnterprise.com
January 13, 2020
Saving for college: Should I use a 529 Plan? Hey Taylor Wondering if you can explain 529 plans to me. One of my New Year’s Resolutions is to put Taylor aside college Kovar savings for my kid but I’m getting a little confused about the best way to do it. - Scott Hey Scott - Happy to break down 529 plans. And, for a more detailed answer, you can head to GoFarWithKovar.com and read a full article about the different options for saving up for college. In the meantime, here are my three main points about 529s. Two plan options. 529 plans are offered through individual states and provide two choices for investors. You can either get a prepaid plan, in which you pay a portion of tuition at today’s prices, or you can go with the savings plan and keep accruing wealth between now and when your kid goes to school. Both options will save you money, it just depends on how far ahead you’ve thought this through. Also, it's important to be aware that you are not limited to using a 529 plan from your home state, but each state does have its own guidelines. Tax incentives. One of the best aspects of this type of savings account is the tax benefit. Again, these vary by state, but you can generally avoid state and federal taxes on the money earned by whatever you invest into the account. The tax incentive goes out the window if you try to use 529 funds for anything other than tuition, books, and other educationrelated expenses. As long as you don’t contribute more than $15,000 in a given year, you should also be able to avoid a gift
tax. Just as retirement accounts help people save money on taxes, 529 plans offer a great way for people to save for college so that more Americans can get an education without falling into debt. Education only. Should you save and save and save and then your child decides not to go to college, the tax incentives won’t hold up. However, these accounts are transferable in case another family member plans to go to school or you want to reinvest in your own education. If no one intends to use the account for qualified expenses, the funds will not only be charged normal income taxes but also a 10% tax penalty, just as you’d see with an early withdrawal from an IRA. There are obvious benefits to a 529 plan, and if you know for certain that your child will go to college, this is a great option. If that future is less clear in your mind, you can look into other accounts that allow you to save with a little more flexibility. Hope this helps! Taylor Kovar, CEO of Kovar Capital. Read more about Taylor at GoFarWithKovar.com Disclaimer: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.co m, or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
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Living with children Q: Our tenyear-old granddaughter lives with us. We have custody of her but her father, our son, is now asking us John for visitation Rosemond privileges. I probably don’t need to tell you that both he and his ex-wife were not up to parental responsibilities. He says he’s cleaned up his act and wants a relationship with his daughter. She says she wants to see him, too. We’re not completely opposed, but we’ve heard all this before and are, of course, skeptical. She came to us two years ago with major behavior problems – disobedience and lying, mostly – and has improved some but not a lot since then. She’s been seeing a therapist for more than a year but my husband and I see no improvement. We recently found out that she and the therapist spend most of their sessions playing board games and doing crafts. My granddaughter wants to continue her therapy, but we don’t see how playing board games is going to bring about improvement in her behavior. Can you give us some direction here? A: I’ll do my best. I can’t really comment on the therapist’s treatment plan; furthermore, I want to believe there’s more to it than simply board games, but I will tell you, I’ve heard of that sort of thing before. If I was working with you folks, I wouldn’t waste time or money seeing the child. In my estimation and experience, there’s very little if anything a child this age can contribute to a proper understanding of the sorts of problems you’re experiencing. You need a plan for dealing with your granddaughter’s behavior problems, and you need it fast. She’s at a critical stage of development as far as problems of this nature go. If they are not resolved soon, you may well be dealing with a full-blown sociopath in a few years. As for the father’s desire to have visitation with his daughter, I
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think there’s a possibility that could be a good thing for her. The research is very clear that fathers become increasingly important to a young girl’s positive development beginning around your granddaughter’s age. Nonetheless, until you’re confident that everything is going well, I’d recommend limiting visits to daytime hours. As for the behavior problems, the first thing I’d recommend is that you scrub her life clean of electronics, anything that she can use to text, get on the Internet, and so on. You need to have complete control of her communications. Second, she should have social contact with girls only and only girls you vet and approve. Next, if her father will cooperate, she should have visitation with him only if she has a “good week” at home and at school. If you determine that she doesn’t merit visitation, her father should have a serious conversation with her, emphasizing how much he wants to have time with her, but also confirming his support for the decisions you make in that regard. Certainly, a newspaper-column length answer is not going to be sufficient. I hate to get selfpromotional, but reading several of my books might help get all of you on the right track. Have the father read them as well, then get together and discuss how what you’ve read applies to your situation and how you can use it to, hopefully, begin turning things around. It’s a start, but a good start is the most important part of any process. Family psychologist John Rosemond: johnrosemond.com, p arentguru.com. John Rosemond has worked with families, children, and parents since 1971 in the field of family psychology. In 1971, John earned his masters in psychology from Western Illinois University and was elected to the Phi Kappa Phi National Honor Society.
