Seven Items for Your Year-end 529 Checklist

Financial Professional Content The fourth quarter of the year is the most important time to review your clients' 529 plans and have them take action when necessary. Here are seven of the most important items to consider. 1. Making an investment change Review your accounts to ensure your clients are still using the investment options most appropriate to their goals. If not, they should be making their twice-per-year investment change before December 31. You can then suggest up to two investment change anytime during 2018 if circumstances change. If they wait until January 2018 to make a change, only two changes will be permitted until the following January, unless beneficiaries are changed. 2. Grabbing a state tax deduction Although a few states have established an April 15 contribution deadline for purposes of their state tax deduction, most apply a December 31 cut-off. And in some states, contributions must be received by December 31, not just postmarked by that date. If your clients live in a state offering a state income tax deduction for 529 contributions and have children in high schoolï ¿ ½or even in collegeï ¿ ½they probably should be taking full advantage of their state benefit. Even if they pull the money back out in a few weeks or months to pay tuition bills, they have locked in their extra state tax savings. (Holiday parties are a great time to mention this tactic to college parents. They will be so impressed that they may want to use your services going forward!) Couples with future-born children can also take advantage of the benefit in most states by opening the account in their own name as beneficiaries, and changing beneficiary anytime after their child is born. 3. Taking qualified withdrawals Once the 529 account beneficiary begins incurring college costs, the timing of withdrawals becomes critical. The fourth quarter is a great time to take withdrawals in reimbursement of any expenses already paid during the year, or expected to be paid by December 31. The best approach for many account holders is to simply count up all qualified higher education expenses for the year, subtract $4,000 (but only if planning on claiming the American Opportunity Tax Credit), and request a withdrawal of the resulting amount. Speaking of the American Opportunity Tax Credit, properly timing the payment of the upcoming spring semester tuition billï ¿ ½either prepaying in December or waiting until Januaryï ¿ ½can make a difference in maximizing the benefit of the credit. Be sure the 529 withdrawals match up with the payment decision. In other words, your clients should not be taking out 529 money in December for tuition bill payments made in January, or they risk paying tax and penalty on a non-qualified withdrawal. 4. Making use of the gift-tax annual exclusion The $14,000 gift-tax annual exclusion is "use it or lose it." A 529 plan offers the only opportunity to utilize the gift-tax annual exclusion, reduce future estate taxes, and maintain full control and ownership of the asset (including the right to revoke). Your high net-worth clients should be taking advantage of this opportunity. The special 5-year election permits frontloading of 529 contributions by spreading as much as $70,000 in contributions ($140,000 for married couples) over five years for gift-tax purposes and applying up to five years' worth of annual exclusions. For clients intent on starting a 529 account before year-end and using the 5-year election for maximum gift-tax-free contributions, consider the strategy of having them contribute $14,000 by December 31, and another $70,000 in January 2018. This way they will have $84,000 going into the 529 plan rather than just $70,000. 5. Positioning assets and income for best financial-aid eligibility The critical years for determining financial-aid eligibility begin with the calendar year the student enters his or her junior year of high school: it's the last year that any income reported by the student or the parents on their tax returns does NOT have an impact on aid eligibility. For example, liquidating mutual funds and recognizing capital gains during the student's sophomore/junior year of high school will have no impact on aid eligibility, but doing so during the student's freshman year of high school could have a major impact. Notice, when it comes to income it's the "base year" that gets reported on the FAFSA, whereas with assets it's the date of submission value that gets reported. Grandparent-owned 529 accounts can be especially challenging because distributions are included in the student's base-year income, although the account value (being a grandparent asset) is not reportable at all. A timely series of transfers from grandparent-owned 529 accounts to parent-owned 529 accounts can provide the best results, at least on paper. UPDATE: The U.S. Department of Education announced new income reporting rules for the Free Application for Federal Student Aid (FAFSA), beginning with the 2017-18 school year. Instead of using prior year income as "base year" income, the FAFSA now uses prior-prior year income. For example, the FAFSA will report 2016 calendar year income for the 2018-19 Expected Family Contribution (EFC) determination instead of 2017 calendar year income. 6. Trigger some UGMA/UTMA gains The kiddie tax kicks in once a child's investment income passes $2,100. It can make a lot of sense to trigger some UGMA/UTMA gains each year, staying below the kiddie-tax threshold, and avoiding the bunching of gains if the client waits until the money is needed for school before liquidating positions. Consider contributing the liquidation proceeds into a 529 account, where future gains will not be taxed if used for college, and where financial-aid treatment of the UGMA/UTMA is greatly improved. 7. Communicate holiday gifting desires More and more, parents are hoping, and even requesting, that contributions to their children's 529 accounts be substituted for material gifts during Christmas or other gift-giving occasions. For those who feel this way, now is a great time to get the word out to family members and let them know that little Johnny has an account with XYZ 529 Plan. Many 529 plans have a free and easy online "friends and family" gifting service. Alternatively, the family member can simply make out a check to the XYZ 529 Plan and send it to the parent who will then deposit it with the 529 plan. Doesn't this sound a lot easier than shopping at the mall? Financial Professional Content The fourth quarter of the year is the most important time to review your clients' 529 plans and have them take action when necessary. Here are seven of the most important items to consider. 1. Making an investment change Review your accounts to ensure your clients are still using the investment options most appropriate to their goals. If not, they should be making their twice-per-year investment change before December 31. You can then suggest up to two investment change anytime during 2018 if circumstances change. If they wait until January 2018 to make a change, only two changes will be permitted until the following January, unless beneficiaries are changed. 2. Grabbing a state tax deduction Although a few states have established an April 15 contribution deadline for purposes of their state tax deduction, most apply a December 31 cut-off. And in some states, contributions must be received by December 31, not just postmarked by that date. If your clients live in a state offering a state income tax deduction for 529 contributions and have children in high schoolï ¿ ½or even in collegeï ¿ ½they probably should be taking full advantage of their state benefit. Even if they pull the money back out in a few weeks or months to pay tuition bills, they have locked in their extra state tax savings. (Holiday parties are a great time to mention this tactic to college parents. They will be so impressed that they may want to use your services going forward!) Couples with future-born children can also take advantage of the benefit in most states by opening the account in their own name as beneficiaries, and changing beneficiary anytime after their child is born. 3. Taking qualified withdrawals Once the 529 account beneficiary begins incurring college costs, the timing of withdrawals becomes critical. The fourth quarter is a great time to take withdrawals in reimbursement of any expenses already paid during the year, or expected to be paid by December 31. The best approach for many account holders is to simply count up all qualified higher education expenses for the year, subtract $4,000 (but only if planning on claiming the American Opportunity Tax Credit), and request a withdrawal of the resulting amount. Speaking of the American Opportunity Tax Credit, properly timing the payment of the upcoming spring semester tuition billï ¿ ½either prepaying in December or waiting until Januaryï ¿ ½can make a difference in maximizing the benefit of the credit. Be sure the 529 withdrawals match up with the payment decision. In other words, your clients should not be taking out 529 money in December for tuition bill payments made in January, or they risk paying tax and penalty on a non-qualified withdrawal. 4. Making use of the gift-tax annual exclusion The $14,000 gift-tax annual exclusion is "use it or lose it." A 529 plan offers the only opportunity to utilize the gift-tax annual exclusion, reduce future estate taxes, and maintain full control and ownership of the asset (including the right to revoke). Your high net-worth clients should be taking advantage of this opportunity. The special 5-year election permits frontloading of 529 contributions by spreading as much as $70,000 in contributions ($140,000 for married couples) over five years for gift-tax purposes and applying up to five years' worth of annual exclusions. For clients intent on starting a 529 account before year-end and using the 5-year election for maximum gift-tax-free contributions, consider the strategy of having them contribute $14,000 by December 31, and another $70,000 in January 2018. This way they will have $84,000 going into the 529 plan rather than just $70,000. 5. Positioning assets and income for best financial-aid eligibility The critical years for determining financial-aid eligibility begin with the calendar year the student enters his or her junior year of high school: it's the last year that any income reported by the student or the parents on their tax returns does NOT have an impact on aid eligibility. For example, liquidating mutual funds and recognizing capital gains during the student's sophomore/junior year of high school will have no impact on aid eligibility, but doing so during the student's freshman year of high school could have a major impact. Notice, when it comes to income it's the "base year" that gets reported on the FAFSA, whereas with assets it's the date of submission value that gets reported. Grandparent-owned 529 accounts can be especially challenging because distributions are included in the student's base-year income, although the account value (being a grandparent asset) is not reportable at all. A timely series of transfers from grandparent-owned 529 accounts to parent-owned 529 accounts can provide the best results, at least on paper. UPDATE: The U.S. Department of Education announced new income reporting rules for the Free Application for Federal Student Aid (FAFSA), beginning with the 2017-18 school year. Instead of using prior year income as "base year" income, the FAFSA now uses prior-prior year income. For example, the FAFSA will report 2016 calendar year income for the 2018-19 Expected Family Contribution (EFC) determination instead of 2017 calendar year income. 6. Trigger some UGMA/UTMA gains The kiddie tax kicks in once a child's investment income passes $2,100. It can make a lot of sense to trigger some UGMA/UTMA gains each year, staying below the kiddie-tax threshold, and avoiding the bunching of gains if the client waits until the money is needed for school before liquidating positions. Consider contributing the liquidation proceeds into a 529 account, where future gains will not be taxed if used for college, and where financial-aid treatment of the UGMA/UTMA is greatly improved. 7. Communicate holiday gifting desires More and more, parents are hoping, and even requesting, that contributions to their children's 529 accounts be substituted for material gifts during Christmas or other gift-giving occasions. For those who feel this way, now is a great time to get the word out to family members and let them know that little Johnny has an account with XYZ 529 Plan. Many 529 plans have a free and easy online "friends and family" gifting service. Alternatively, the family member can simply make out a check to the XYZ 529 Plan and send it to the parent who will then deposit it with the 529 plan. Doesn't this sound a lot easier than shopping at the mall?

Pride A Virtue or a Curse - Literature Essay Samples

Though pride can have a negative connotation and is often thought of as a synonym for being full of one’s self, it can also be an honest and healthy feeling of genuine satisfaction with one’s own achievements. In other instances, pride can also keep an individual grounded and can give them a sense of worthiness, even if the circumstances surrounding them are less than favorable. In order to avoid living a life full of constant self-doubt and unhappiness, it is necessary for a person to have some measure of pride in their lives. However, once an individual has become so blinded by pride that it has started to negatively affect their choices and those around them, the pride that was once a positive value turns into arrogance. Pride can be seen in many characters throughout literature, including Odysseus from The Odyssey by Homer, and Santiago from The Old Man and the Sea by Ernest Hemingway. Though both exhibit the value, the epic hero Odysseus’ pride is portrayed as arrogance, while Santiago shows his pride in a humble manner more fitting for a code hero. Pride can mean different things to different people, and it can be seen in Odysseus and Santiago, who both possess pride but show it in a different way. Due to his role as an epic hero, a high station seen to be somewhere between the gods and ordinary people, paired with his great accomplishments in the past, Odysseus from the Odyssey felt a great sense of pride in who he was. This can be seen when he says, â€Å"Cyclops, / if ever mortal man inquire / how you were put to shame and blinded, tell him / Odysseus, raider of cities, took your eye: / Laertes’ son, whose home’s on Ithaca!† (Homer 36). At this point in the text, Odysseus and is crew of men have just escaped from the island of the Cyclops, and they were all safely on the ship, ready to continue their journey. In order to escape from the island, Odysseus had blinded the Cyclops, who was still on land and unable to harm them. However, as seen in the quote, Odysseus shouted his name back to the Cyclops, giving in to his need of being credited for all of his actions. Since he knew the Cyclops was within earshot, Odysseus could not pass up this chance to ensu re that he was not being forgotten by a world that had moved on since his great actions in battle many years ago. This shows Odysseus’ prideful arrogance, as he made a deliberate choice with the pure intent of exerting his believed superiority over his beaten enemy by rubbing in the fact that he had been the one to blind him. Though his past actions were great and worthy of recognition, the attention that he had gotten for it fueled Odysseus’ desperate need to not be forgotten, which further proves that he was very self-centered and arrogant. This led to him shouting his name back to the Cyclops, which proved to be a poor choice as the Cyclops was then able to tell his father, the sea god Poseidon, exactly who had blinded him. As a result of his unnecessary decision that was made purely with his own interests in mind, Odysseus lost his entire crew throughout the course of the journey to the wrath of the gods. Odysseus’ pride, which could also be seen as arroganc e, led to a desperate need within in him for others to know his name and associate all of his great deeds with it, and resulted in him making poor decisions that harmed other people. The main character of The Old Man and the Sea, Santiago, was an old man who had built up a deep sense of pride throughout his life. He also exhibited the qualities of a code hero, as he dealt with some unavoidable losses in an honorable way while still maintaining his pride. As demonstrated in the text, â€Å"‘Thank you,’ the old man said. He was too simple to wonder when he had attained humility. But he knew he had attained it and he knew it was not disgraceful and it carried no true loss of pride† (Hemingway 13-14). At this point in the text, it was the evening before the old man set out on his mission to finally catch the great fish he had been dreaming about for so long, despite not having caught anything for weeks. The quote implies that at one point in his life, when he was still in his prime, Santiago might have been more arrogant due to his extraordinary fishing skills. Now, however, he has come to the realization that he is a humble person, but he did not dwell in misery over what had made that happen whether it was old age or the lack of fish he was bringing in. It becomes even clearer to the reader over the course of Santiago’s very personal journey attempting to catch the great fish that he has not fallen into desperation. Though it was a hopeless attempt from the beginning, Santiago, a true code hero, suffered through it all with dignity and grace. This shows his pride, something that was not caused by the praise and admiration of others, but rather by his own dignity that he carried within himself, regardless of what happened or what other people thought of him. As seen by his thoughts in the text, Santiago was able to admit that humility was not something to be ashamed of, and he acknowledged that it could exist alongside pride. This allowed him to follow his ambitions of catching the great fish while also being able to accept inevitable failure without losing his sense of self worth. Santiago demonstrates pride at its greatest, since it existed within the old man as a deep understanding beyond shallow arrogance. Both The Odyssey and The Old Man and the Sea show the value of pride through their main characters Odysseus and Santiago, respectively. The two characters share similar stories heroes who were past the prime of their lives and quickly being forgotten by the world. As the years went on, Odysseus’ actions in battle were starting to fade into the distant memories of people, and he was no longer as physically capable or attractive as he had been. Similarly, Santiago was an old fisherman who was largely ignored by his peers, as he was no longer bringing in any catches. Both texts demonstrate the way that pride continues to play an important part of people’s lives, even when the reason they may have initially gained their pride is long gone. During their prime, Odysseus and Santiago had been the best at what they did, leading to a deep sense of pride that was rooted within them and stayed with both of them even when things started to head downhill. However, the two work†™s portrayal of pride differs when it comes to the attitudes that their characters exhibit regarding their pride. Odysseus displayed his pride in an arrogant manner, which could be seen in the ways that he exerted his dominance over other people. Due to his belief that he was superior to others, Odysseus often withheld important information from his men, taunted his enemies, and made poor decisions that he justified with his status. His arrogance could also be seen in his strong desire to remain well known, which was demonstrated when he called back to the Cyclops. Santiago, on the other hand, displayed his pride in a more noble way. He did not allow himself to live the rest of his life blinded by arrogance and driven by the desperate need to remain respected despite being well past his glory days, as Odysseus did. Instead, Santiago acquired a deeper understanding of pride as he gained humility with old age and came to the realization that the two could coexist. His determination to catch the great fish showed that he was still in pursuit of his dreams and had not lost sense of his inner pride and worthiness, despite what others thought of him. Santiago’s struggle of catching the fish and his ordeal fighting the sharks also showed that while he did not believe in giving up, he was not afraid or ashamed of failure, a great understanding of life that can only be obtained through humility. Despite humility and pride seemingly being opposites, Santiago took pride in his understanding that humility is not a weakness, whereas Odysseus’ arrogance blinded him to such truths. The Odyssey and The Old Man and the Sea depict the idea of pride through characters with similar stories yet different outlooks on life. Pride is an extremely important quality to possess, despite its ability to be harmful if one becomes too prideful. Pride can be gained in different ways, such as through the praise of others or through a personal understanding of self worth, and it can also be shown in different ways. Examples of pride can be seen in many aspects of real life, as well as in famous literature. The epic hero Odysseus from The Odyssey is excessively prideful and shows the value through his arrogance, which leads to negative consequences. The more reserved code hero Santiago from The Old Man and the Sea demonstrates pride as an honorable sense of dignity that he shows regardless of the situation. Both The Odyssey by Homer and The Old Man and the Sea by Ernest Hemingway portray pride through the lives of the heroes featured in the works.