Word: taxed
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...sure I'm not the only one contemplating this question. Named after section 529 of the Internal Revenue Code, these plans can be a terrific tax-advantaged way to save for college, but many of these accounts have been seriously thwacked in the bear market. As of Feb. 28, half of 529 portfolios had one-year returns of -30%, and a third had returns of -40% or less, according to Morningstar, which tracks the performance of over 3,600 plan portfolios. In some cases, 529 investors may not have been well informed of the risks. On April 13, the state...
...hopes of regaining control of how their money is being invested, many families have been asking about the possibility of cashing in their 529 accounts altogether and writing off the loss on their taxes, says Joe Hurley, who runs savingforcollege.com, a website that provides information and advice about 529 plans and allows investors to compare different state plans. The good news is that for some people, closing an account can result in a significant tax write-off. But as with most things tax-related, the rules are complicated. Here's what to consider before you bail...
...Your chances of getting a tax break. The bad news is that in many cases, investors can't write off as much as they might think. Among the restrictions: you must completely liquidate your account in order to claim a loss. You have to claim it as a miscellaneous deduction, which means you can only deduct losses that exceed 2% of your adjusted gross income (AGI); other miscellaneous deductions can include IRA losses and fees paid to a financial adviser. So if your AGI is $100,000, for example, and your 529 lost...
...beneficiary. If your child is young, the account has a long time to bounce back before you'll need the funds for college. If you stand to reap big tax savings, however, liquidating may be worth it since you could later re-invest the money in another 529 account. Just make sure to wait at least 60 days before you open a new 529, or the IRS may consider it a rollover, which isn't deductible for tax purposes...
...money to go around, which assets will be protected? The economy has created a situation where many critical industries will have to suffer a substantial number of bankruptcies unless their governments step in. Or their governments can let the Chinese buy them which would likely preserve jobs and the tax income from the businesses...