April has been designated Financial Literacy Month to focus on increasing the public’s comprehension of basic monetary concepts. Many banking institutions and credit union offer financial wellness seminars. Additionally, university extension offices may provide financial literacy classes. By doing a little research, people can find many free resources available to improve their understanding of how to best use, as well as save, their money.
For the 529 industry, progress has been made in educating the public about the abundant advantages of these college savings plans and it must continue.
While student loan debt nationally has risen to $1.3 trillion, there has also been a marked increase over the past ten years in saving for college which indicates a measure of thoughtful financial literacy. According to the Sallie Mae report, “How America Saves For College 2016,” 57 percent of parents are now saving for their children’s future college costs, up 9 percent from 2015. Additionally, the average savings amount now stands at $16,380, an increase from $10,040 in 2015. The report also found that families who use 529 college savings plans have saved more than other college savers. A takeaway from the report is people are learning about the added tax benefits and values of 529 college savings plans and are using them.
There is still more for the public to understand about 529 plans, including one that many people don’t recognize – that 529 accounts aren’t just for children. If an adult would like to head back to college to finish their degree, hone their professional skills, or start a new career path, then they should consider opening a 529 college savings account for their own college expenses and tax benefits.
Traditionally, 529s have been used to fund children’s future college costs; however, there are no age restrictions on who can use these college savings accounts and no time limits on when the account must be used. Furthermore, 529 plans were created to be used at any federally accredited educational institution, which includes two-year, four-year, graduate, professional or post-secondary degree programs. For working adults who want to continue their college education to advance their career, they should check with their human resource department to see if tuition reimbursement is a part of the employee benefits. This benefit combined with 529 savings could significantly reduce higher education costs.
All the tax advantages associated with a child’s 529 account would also apply to an adult’s account. The 529 college savings plan will grow with tax-free earnings on contributions. Withdrawals from 529 plans are also tax free, provided the funds are used for qualified higher education expenses, which includes many large costs like tuition, mandatory fees, and computers. Some states also allow deductions to state taxable income based on contributions made to 529 plans.
An additional benefit to 529 plans: If there is money left over in a child’s plan, the account owner can transfer the remaining funds to the parent’s account. No tax penalties will be accessed with the transfer as long as the new beneficiary is a family member, which the parent is. By rolling over these 529 plan assets, the account owner can use the money already set aside for college expenses for their own continuing education.
People want to understand their finances and make informed fiscal decisions. As they learn more about the multiple benefits of 529 accounts, the use of these college savings plans will continue to grow.
About the author:
Tim Gorrell is the executive director of Ohio Tuition Trust Authority. For more than 25 years, Ohio Tuition Trust Authority has sponsored and administered CollegeAdvantage, Ohio’s 529 College Savings Program. CollegeAdvantage now oversees more than 635,000 accounts and over $9.92 billion in assets. Visit CollegeAdvantage.com or call 1-800-AFFORD-IT (233-6734) to learn more.
There are 13 million college savings accounts in this country, and more than half received at least one deposit in 2016. Those are decent numbers, and growing—but they cover just a tiny fraction of the country’s college-bound population.
A current bill in the House of Representatives aims to change that. Supporters of H.R. 529 say it could address both a lack of awareness of the plans—by encouraging employers to add 529 plans to their benefits package—as well as inflexible spending rules, by offering more ways to use 529 funds without getting hit with a penalty.
The bill, co-sponsored by Rep. Lynn Jenkins (R-Kan.) and Rep. Ron Kind (D-Wis.), would let companies contribute up to a $100 match to employee 529 plans without counting it as taxable compensation, and would offer a tax credit to small businesses to help offset the costs of setting up a payroll deduction system. (The bill also provides for similar payroll matches for ABLE account contributions.)
Savers also would be able to use money from a 529 account, penalty-free, for paying off student loans or making charitable contributions. Currently, 529 account holders must pay a 10% penalty on earnings if they use the money for anything but approved college costs.
Although 529 plans have been around for 20 years, growth has been relatively slow for a variety of reasons. One key challenge: Surveys regularly find that many parents have never heard of 529 plans or don’t understand how they work.
Leaders of the College Savings Plans Network, a coalition of state-run college savings programs, hope that 529 plans can follow the path of 401(k) accounts to become a widely offered employee benefit. “When companies got into payroll deductions and matching contributions, there was a huge growth in people participating,” says Young Boozer, the Alabama state treasurer and chairman of the College Savings Plans Network.
A One-Stop Shop to Help Plan, Save, and Pay for College
Hartford, CT – A partnership of State agencies today launched CT Dollars & Sense, a new on-line portal that provides one convenient website for Connecticut students and parents to find out how to plan, save and pay for college.
CT Dollars & Sense, www.CTDollarsandSense.com,combines college planning and financial literacy information from five separate agencies: the Connecticut Higher Education Trust (CHET), the Connecticut Higher Education Supplemental Loan Authority (CHESLA), the Office of Higher Education, the Department of Banking, and the Department of Consumer Protection.
Students can get information on scholarships, loans, and college savings plans, and also learn how to budget their money or find internships. In addition, iGrad provides financial literacy information and resources on the site.
The site’s welcome message reads, “Welcome to CT Dollars & Sense, Connecticut’s one-stop shop for helping you plan, save and pay for college. We have the information that you need – whether you’re trying to save, looking for scholarships, considering a loan, or just want to figure out how to put it all together. CT Dollars & Sense – a great resource for Connecticut students and their families.”
State Treasurer Denise L. Nappier, Trustee of CHET, Connecticut’s 529 College Savings Program, stated, “College affordability has become an important issue for families across the state and the country, with a lack of adequate financing causing an increasing number of students to go deeply into debt or, in some cases, drop out. CHET is proud to play a part in making college education more accessible for Connecticut families despite the headwinds of our time. This new website – by offering information on saving for college, student loan options, financial aid, and scholarships, all in one place and in easy to understand language – should prove invaluable to our State’s students and their families.”
CHESLA Executive Director Jeanette W. Weldon added that “this new website is informative and easy to use. Students can learn how to handle their finances and plan for future careers using a lot of fun, interactive content that will help improve their financial literacy.”
Keith Norton, Acting Executive Director of the Office of Higher Education also emphasized that “Financial literacy is a critical skill which our young people must possess as they prepare for both careers and running their own households. CT Dollars & Sense provides students the opportunity to develop a keen understanding of personal financial responsibility while at the same time providing critical information used to determine how best to finance higher education costs.”
CTDollarsandSense.com is accessible on a computer or mobile device. The site is being promoted through school counselors and financial aid offices, and will be regularly updated with new information.
As a father, I understand the coveted gift all parents dream of giving their children: debtless college educations. However, I also understand how short-term financial necessities and unexpected extras can often overshadow long-term saving goals. From diapers to daycare and family vacations to holiday presents, it’s often tempting to put college savings on the back burner. But the truth is, “college savings procrastination” can be quite dangerous.
According to the College Board, the average cost for tuition and fees at four-year public institutions has increased 225 percent over the last 30 years (after adjusting for inflation). These costs will almost certainly continue to rise. Furthermore, student financial aid expert Mark Kantrowitz recently calculated that students in the class of 2016 graduated with a record-breaking average of $37,172 in college-related debt. Fortunately, these striking statistics can be combatted by saving.
Saving for higher education can set your child on the road to a secure future. The earlier you start, the more time you can grow your savings. For example, if you set aside $50 a month between your child’s birth and 18th birthday, you can accrue over $21,000 in a 529 college savings account that returns 7 percent interest per year. Spreading out your savings in smaller increments from the start will save you from heavy hits to your finances in the future….
More than $40 billion in unclaimed cash & property waits to be returned. At first glance, that figure seems staggering, unbelievable — and, yet, it is true. To be more exact, the National Association of Unclaimed Property Administrators (NAUPA), a coalition of state unclaimed property programs, puts the total at $41.7 billion.
How do you find out if some of this money is rightfully yours? First, you can either go to missingmoney.com (a NAUPA website), or the website of your state’s unclaimed property program. A search should let you know the answer. Aside from searching in the state where you currently reside, you can also search for unclaimed assets in states where you previously worked or lived.
In all 50 states, financial institutions and insurers must escheat (i.e., hand over) account assets to the state if the owner has failed to contact the institution or insurer for a year or longer. The onus is then on the state’s unclaimed property department to find the owner, or at least make public that such assets are waiting to be claimed. How long does an original owner or an heir have to claim the forgotten assets? Usually, there is no statute of limitations.
All kinds of assets are held by these state programs — payroll and dividend checks that were never cashed, death benefits from life insurance policies, distributions from trusts and, of course, stock certificates and property that once occupied safe-deposit boxes.
This is just at the state level. More unclaimed money awaits at the federal level; although, no convenient central database exists to find it. (Unclaimed.org, another NAUPA site, is a good place to start.) In March 2016, the Internal Revenue Service announced that this year’s tax deadline is also the deadline for Americans to claim almost $1 billion in federal income tax refunds from the year 2012. (Next April will represent the last chance to claim 2013 refunds.) Beyond what the IRS has, federal coffers contain unredeemed U.S. savings bonds, checking and savings account deposits from failed banks and credit unions, refunds on FHA-insured home loans and unremembered pension money.
More than two million web hits, 59,600 new claims for more than $48 million
Hartford, CT – Driven by a record response to the latest CT Big List Unclaimed Property outreach campaign, more than 59,600 inquiries and claims were initiated during the first four weeks for assets valued in excess of $48 million — the largest number and dollar amount of claims ever opened in a month during the program’s 83-year history.
State Treasurer Denise L. Nappier stated, “Our mission is to return unclaimed property to rightful owners. The incredible response to our latest web-based outreach campaign speaks to the growing appeal of the internet as an effective way to increase public awareness of the CT Big List.”
The outreach campaign included greater use of internet and digital promotion along with a newly designed CT Big List website and a special online publication of 95,000 new names since the 2013 print publication.
The CT Big List, available online at www.ctbiglist.com, features the names of 1.4 million individuals, businesses and organizations that may be entitled to $771 million in unclaimed property. The user-friendly database is updated weekly with new names.
During the first four weeks of the CT Big List campaign, the Treasury received 2.2 million inquiries on the Treasury’s website; 10,351 telephone calls to the toll-free number; and 59,691 claims initiated.
For the last fiscal year ended June 30 2016, the Treasury collected $111 million in unclaimed property, which was $8 million more than projected. During that same year, the Treasury returned $58 million to 15,758 rightful owners.
Unclaimed property includes money from uncashed payroll checks, bank accounts and utility deposits, insurance proceeds, liquidated assets from safe deposit boxes, stocks and bonds. The Treasury receives unclaimed assets from holders such as banks, insurance companies, stock transfer agents, utilities, hospitals, retail, manufacturing and service companies following a loss of contact with the owners of record. These assets are reported and turned over every year, and are held in custody until claimants come forward or are located. There is no time limit to claim the money.
Prior to 2015, state law required newspaper publication every two years of potential rightful owners of unclaimed property turned over to the Treasury during previous years. Since the migration to a web-based outreach, the cost of promoting the CT Big List has declined while the number of claims has increased.
“Every dollar in unclaimed property that we receive is held in custody until the rightful owner steps forward. Until that happens, the money is deposited into the State’s General Fund and put to good use on behalf of Connecticut’s taxpayers,” Treasurer Nappier said.
“From helping to avoid tax increases during difficult economic times, chipping away at the State’s debt burden or relieving the pressure on local governments to fund services that might otherwise be cut, the Unclaimed Property program has been and continues to be an important component of the State’s revenue stream,” Treasurer Nappier said.
There are two ways to find out whether you may be entitled to unclaimed property:
Go to www.ctbiglist.com to search for a name. Download a claim form and follow the instructions;
Call 1-800-833-7318, weekdays between 8:00 a.m. and 5:00 p.m.
“I encourage Connecticut residents, businesses and non-profit organization alike to search the CT Big List website to find what’s theirs! And, even if you don’t see your own name on the list, you might notice a relative, friend or a local business with assets waiting to be claimed,” said Treasurer Nappier.
Comparison of the online outreach campaign to previous print publications indicates a significant increase in website searches and claims initiated. The chart below compares the first 30 days of each campaign:
LOS ANGELES – Treasurer John Chiang announced today that his office has become the first in the nation to offer gift cards – a popular stocking stuffer used by nearly 93 percent of American consumers – as a way of helping Californians give the gift of college.
The cards are arriving in 96 Toys “R” Us stores across California just in time for the holidays. Treasurer Chiang forged the partnership with the largest standalone toy store chain in the world to offer the pioneering new product. The cards will also be available at Babies “R” Us, an affiliate of Toys “R” Us, which offers an assortment of products for newborns, infants, and toddlers.
“There is no more time-tested solution to poverty, crime, or income inequality than to make college education an affordable possibility for every child who seeks one,” said Chiang. “Faced with skyrocketing tuition, we must empower Californians to save, invest, and plan for their children’s futures.”
By using a familiar product in an innovative way, never before has it been this easy for relatives, friends, or even a parent’s employer, to help kids save for college.
Saving for college is critical, state educators agree.
“The University of California and the State are doing all they can to ensure that a college education is affordable through financial aid programs, but saving for your child’s education is a prudent financial decision,” said UC President Janet Napolitano. “Saving for future education expenses through 529 college saving programs like ScholarShare is an essential part of preparing our future generation of students.”
“One of the best ways a parent, grandparent, friend, or relative can help children achieve their college dreams is to begin saving early for college expenses,” agreed State Superintendent of Public Instruction Tom Torlakson.
“Opening or contributing to a 529 ScholarShare account for a child is a great way to do that because earnings from funds in the account are not taxed if the money is spent on college expenses.”
The gift cards allow families and friends to contribute to college savings accounts with California’s highly-rated Scholarshare 529 plan in three easy steps:
Parents or guardians register the child, linking an existing or new ScholarShare 529 plan.
Friends and family can then contribute by purchasing physical or digital gift cards at any California-based Toys “R” Us or Babies “R” Us retail store or online at www.scholarshare.com * The gift cards can then be redeemed at ScholarShare.com/redeem and GiftofCollege.com, where funds are then transferred directly to the recipients’ plan.
A recent study by the Journal of Children and Poverty, concluded that kids with savings accounts in their names are seven times more likely to attend college than children without such accounts.
“Thanks to our Toys “R” Us partnership California families now have an easy and convenient way to build a college nest egg and a realistic path to helping their children earn a college degree without saddling them with crippling debt,” Chiang said.
About the ScholarShare 529 College Savings Plan
Named for the section of the Internal Revenue Service (IRS) code under which they were created, 529 plans offer valuable tax advantages. Contributions are made with money that has already been taxed. Once funds are placed in the account, investment earnings, if any, are not federally or state taxed, if withdrawn to pay for qualified higher education expenses.
California’s 529 plan is called ScholarShare. Accounts may be opened with as little as $25. ScholarShare has no annual account maintenance fee, no income limit and offers a high maximum account balance.
ScholarShare, which is governed by a board chaired by Treasurer John Chiang, is ranked as one of the top-rated 529 college savings plans in the country by Morningstar, an independent investment research firm. ScholarShare currently holds over $6.9 billion in assets in more than 278,000 accounts as of 9/30/16.
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NASHVILLE- This morning, a Joint Convention of the 110th General Assembly reelected David H. Lillard, Jr. by acclamation to a fifth term as Tennessee State Treasurer. The State Treasurer is a Constitutional Officer elected by the General Assembly for a two-year term. In his official capacity, Treasurer Lillard oversees the Tennessee Treasury Department and its more than 270 employees. The Treasury Department internally manages over $55 billion in state and local government funds.
Treasurer Lillard has championed issues of financial literacy and strives daily find new ways to improve the financial lives of Tennesseans. Since first elected in 2009, he has worked with the Treasury Department to provide Tennesseans with financial tools needed to lead a better quality of life. Among his first steps as Treasurer, he worked with the General Assembly to create the Tennessee Financial Literacy Commission and the TNStars® 529 College Savings Program. A top direct-sold college saving plan, TNStars has been nationally ranked for investment performance consistently since 2014. The Tennessee Financial Literacy Commission has worked to incorporate the nationally recognized Financial Fitness for Life® curriculum into K-8 classrooms across the state. This has been achieved by training more than 3,500 Tennessee teachers, pilot programs with three Tennessee school systems and by offering an online interactive financial literacy game as a free resource.
Last year, Treasury opened ABLE TN, Tennessee’s own Achieving A Better Life Experience program, a new resource to help those with disabilities plan and save for the future. Tennessee is one of the first states in the nation to offer these savings accounts. In just 7 months, more than 680 people have opened ABLE TN accounts, and have saved more than $2.4 million to help individuals with physical and/or mental disabilities pay for future qualified expenses.
Under Treasurer Lillard’s leadership, the Treasury Department proposed, and the 108th General Assembly enacted, reforms to the Tennessee Consolidated Retirement Systems (TCRS), the state defined benefit pension plan. These reforms created a hybrid plan with cost controls effective for state, higher education and K-12 teachers hired on or after July 1, 2014. The restructured plan has been recognized as an aggressive, innovative reform that substantially reduces the costs to the state while providing a sufficient and sustainable benefit for State and higher education employees, K-12 public school teachers and employees of electing local government entities. At the end of the FY16 fiscal year, TCRS was valued at more than $43.3 billion and recognized by major credit ratings agencies as one of the highest funded public employee defined benefit retirement systems in the nation.
“It has been an honor to serve our state as Treasurer for the last eight years. With the support of the General Assembly, the Treasury Department has been able to accomplish many great things for our state.” said Treasurer Lillard. “I am honored to serve a fifth term and grateful to the General Assembly for the opportunity to continue to serve Tennessee as a faithful steward of our state’s financial and human resources.”
Treasurer Lillard is an active advocate nationally on the importance of sound management on financial issues. He is the immediate Past President of the National Association of State Treasurers (NAST) and was elected President of the National Association of State Auditors, Comptrollers and Treasurers (NASACT) in August 2016. Both of these organizations bring together officials responsible for the financial management of state governments from across America.
HARTFORD, CT – A $327.4 million General Obligation refunding bond sale conducted earlier this week will save taxpayers $29.3 million in debt service over eight fiscal years, State Treasurer Denise L. Nappier announced today.
“This latest bond sale reflects our ongoing commitment to proactively manage the State’s debt and to take advantage of opportunities in order to achieve real savings for Connecticut’s citizens,” Treasurer Nappier said. “The savings from this bond sale will provide some relief to the state budget — just when it is needed most!”
Of the savings, $2.8 million will be applied to Fiscal Year 2017 as already anticipated in current budget projections. The remaining $26.5 million will reduce debt costs in the state budget, starting in Fiscal Year 2018.
The General Obligation refunding bonds were sold as fixed rate bonds and the proceeds will refinance existing higher cost bonds to lower interest rates for budget savings. The total interest cost was 2.25 percent.
The bonds were first offered to individual investors during a one day retail order period on Monday, December 5. Over $186 million in orders came in from retail investors, the highest level on a General Obligation bond sale since June 2014. An additional $197.9 million of orders came in from institutional investors on the final pricing date of December 6, 2016.
“The retail orders support our belief in the solid value of State bonds. We are delighted to see such strong public demand for Connecticut bonds as worthy investments. By giving individual investors priority during the retail order period, we provide them a compelling opportunity to generate tax-exempt investment income,” said Treasurer Nappier.
The bonds were sold by an underwriting syndicate led by William Blair. The law firms of Day Pitney LLP and Soeder & Associates LLC serve as disclosure counsel with Robinson & Cole LLP and Soeder & Associates serving as tax counsel. Acacia Financial Group, Inc. and PFM are the financial advisors for General Obligation bond sales. The bond sale is scheduled to close on December 21, 2016.
Treasurer Nappier’s Debt Refinancing Program
The Treasurer’s Office has refinanced or defeased $13.1 billion in bonds through the execution of 77 separate financing transactions since Treasurer Nappier took office in January 1999. Total refunding savings on such bond sales now exceeds $1.1 billion. These transactions involved each of the State’s bonding programs, including General Obligation bonds, Special Tax Obligation bonds for transportation infrastructure, Clean Water Fund bonds, University of Connecticut bonds, Bradley Airport bonds, and other bonding programs.
“The State bonding program finances critical infrastructure, and my job is to make sure these investments are funded at the lowest possible cost for taxpayers.” said Treasurer Nappier.
Connecticut typically issues bonds with twenty-year maturities, with provisions that allow the State to pay them off after ten years at no cost. Savings are achieved by refinancing bonds to lower interest rates as well as refinancing longer maturity bonds with shorter maturity, lower cost bonds.