The Trussville Tribune
Page 12
Opinion
Jan. 30 - Feb. 5, 2019
Using Section 529 College Savings Plans For Education Expenses By David Guttery Section 529 Plans were created under the Small Business Job Protection Act of 1996 for the purpose of allowing people a tax advantaged way to save for the higher education expenses of a beneficiary. At a high level, the account is owned by one person, and a successor owner is also named. Usually, these are parents of a child who is the beneficiary of the account, however anyone can own a 529 plan for the benefit of a child. Anyone can make a contribution to the account for the beneficiary. Deposits into 529 plans are considered gifts. Therefore, in 2019, any individual may make an annual gift of up to $15,000 per beneficiary. A donor may elect to contribute as much as $75,000 at one time, and claim five year forward averaging treatment of the gift. (As per the 2019 Internal Revenue Code).
David Guttery
Maximum lifetime contribution limits vary by state, and in Alabama, the limit is $475,000. Some states incentivize their residents to invest within the plan of their state by offering tax deduction against state income tax liability. There is no deduction to be had against Federal income tax liability when gifts are made to 529 plans. Investment growth compounds within such plans on a tax deferred basis. When the beneficiary incurs qualified expenses
for education, the tax deferred gains are distributed on a tax free basis from the plan. Normally, when money is distributed from a 529 plan, tax sheltered earnings and post tax contributions are distributed proportionately. If such funds were distributed for anything other than qualified educational expenses, then a 10% penalty would apply to the tax deferred portion of the distribution, along with a liability of income taxation. However, a distribution can be made from a 529 plan up to the amount of a tax free scholarship, without paying the 10% penalty. Anyone may use the 529 plan of any state, regardless of residency. In such cases, you wouldn’t enjoy resident state deductibility that may have been available with a home state plan. That isn’t the only factor to consider though. I have many clients who have gravitated to out of state plans for other rea-
sons that were pertinent to them. We examine the number of fund offerings, both actively and passively managed. We evaluate age weighted glide path funds, and quantifiable metrics from sources like Morningstar for insight into the performance of the funds, volatility of the funds, consistency of management and expense. There are many factors to evaluate when gauging the efficacy of a 529 plan other than simply an in state tax benefit. In the event that a residual balance remains after graduation, such balances can be transferred into the plans of siblings, or the account can remain open and the beneficiary designation changed to another person. Sometimes, parents consider keeping the account open until the original beneficiary has children of their own, and then they change the beneficiary to reflect the grandchild. Sometimes, the original beneficiary goes
back to school later in life to pursue a higher degree. I’ve even seen cases where the donor parent changed the beneficiary to reflect himself as he went back to culinary school later in life. The bottom line is many options are open to account owners when surplus funds remain in a 529 plan account. (*) = Securities products are subject to investment risk, including possible loss of principal. Before investing, carefully consider the investment objectives, risks, limitations, charges and expenses of the product and any underlying investment options. This information can be found in the prospectuses or offering statements. Please read carefully before investing. Variable products are subject to investment risk, including possible loss of principal. Before investing, carefully consider the investment objectives, risks, limitations, charges and expenses of the product
and its underlying investment options. This information can be found in the product and investment option prospectuses. Copies are available from my office. Please read carefully before investing. David has been in practice for 28 years, with a distinctive focus on the management of retirement assets for the production of durable income. David R. Guttery, RFC, RFS, CAM, is an Investment Advisory Representative of Ameritas Investment Corp, and President of Keystone Financial Group, in Trussville, Alabama. David independently offers securities and investment advisory services through Ameritas Investment Corp. (AIC) member FINRA/SIPC. AIC and Keystone Financial Group are not affiliated. Additional products and services may be available through David R. Guttery or Keystone Financial Group that are not offered through AIC.
The high price of protecting the public By Alabama Attorney General Steve Marshall
unknown on a daily basis to face potential personal injury and even death. Why would anyone want to take on such a job? To those who train and take an oath to become a law enforcement officer, it is not a job. It is a calling. They do not seek fame and fortune. They wear a badge with pride out of a special commitment to safeguard their community. And let us not forget the sacrifice of the families of law enforcement who wait up nights for their loved one’s return. They need no reminder of the too often perilous nature of the work of our men and women of law enforcement. All of us want to live in peace and safety, but how many would be willing to walk the beat of a law enforcement officer to help guarantee that safety? Birmingham Police Sergeant Wytasha Carter and Mobile Police Officer Sean Tuder did just that. At approximately 2:00 a.m., Sunday, January 13, Sergeant Carter was on the lookout for vehicle break-ins when he was notified of suspicious activity and responded along with other officers. Two persons were stopped in a parking lot and were being searched when one pulled out a gun and shot Sergeant Car-
Barely three weeks into the New Year – a time that is supposed to be full of optimism for the future – Alabama has already reached a somber milestone. Our state is tied with Texas for the highest number of law enforcement line-of-duty deaths in the country for 2019. Two Sundays in a row, major cities of our state suffered the sudden loss of a beloved police officer. Each officer was performing his sworn duty to protect the public and uphold the law when he was fatally struck down by gunfire. Both faced danger without hesitation and both acted with courage and commitment, just as they had been trained. And each gave his life. The daily actions of our law enforcement personnel in the performance of their duties may seem routine work to the public, but they only see the outside. Behind the badge, polished shoes and friendly smile, stands a person dedicated to protecting the lives of Alabamians, even if their job places them directly in harm’s way. While there are other occupations that can be hazardous to a worker, few demand that a person enter the
ter and another officer. Sergeant Carter lost his life that morning, but his 17 years’ service for the Birmingham, Leeds and Fairfield police departments and the Shelby County Sheriff’s Office were celebrated by a tremendous public response. Alabama sends condolences to Sergeant Carter’s family. At approximately 3:00 p.m., Sunday, January 20, Officer Tuder was attempting to serve an arrest warrant on a suspect in Mobile. During the arrest, the suspect shot and fatally wounded Officer Tuder, a three-year veteran of the Mobile Police Department who was previously honored as Officer of the Month. Prior to coming to Mobile, Officer Tuder served with the Palatka, Florida Police Department for two years. Officer Tuder’s funeral service is this Friday, and I am certain there will also be an overwhelming public turnout. His death is a painful reminder of the loss of another young Mobile police officer, Justin Billa, less than a year ago. I know I join all of Alabama in sending condolences to Officer Tuder’s family. More than 500 Alabama law enforcement officers have died in the line of duty during the last 100 years of record keeping. Each is a hero. All gave everything so their com-
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munities could be safe. There is a high price to pay for putting on the uniform of a peace officer. This month, Alabama knows as much about the sacrifice of law enforcement as any state in America. Law enforcement continues to take on more responsibility, sometimes with less
manpower and funding. In addition to responding to calls of domestic violence, burglaries, armed robbery, assault, and drug trafficking-to name but a few-they also deal with homeland security concerns and the growing reach of cybercrime. As the Attorney General
and chief law enforcement official for the state of Alabama, it is my honor to stand with our law enforcement as they stand on a daily basis between order and chaos. We cannot thank law enforcement enough for what they do for us, and we will never forget their sacrifice.