2013 College Funding Whitepaper

Almost everyone with young children and  teenagers needs to be thinking about how they are going to  help their children fund their college expenses! This is not something that you  can start effectively planning with a 17-18 year old! Effective planning strategies are most effective if you start implementing them when your children are 7-12 years old!  The fund allocation  strategies also  require that funds be allocated before  you start working on your Free Application For Student Aid (FAFSA)  Time is your best friend!
Albert Einstein said "one of the greatest wonders in the universe is the compounding of interest!" This is from the same guy who discovered  E=MC2!

If you  want a copy of my whitepaper titled "2013 Guide to College Funding"
If you  want a copy by email it is available at no charge. If you live in the US and want a copy by regular mail it is also available. However for mailed copies there is a charge of $6.00 including shipping and handling. We prefer to send it by email!

It discusses  Scholarships, Grants, 529 Plans, ROTH IRA, 401K Plans, Cash funding and TAX FREE funding strategies. It also includes strategies that can help you increase your eligibility for Financial Aid. This involves ways to reduce your out of pocket expense in the college funding process. Some of these you can implement on your own but some do require the use of a financial professional  like us!  Even families with close to a 6 figure income  or 6 figure assets can benefit from some of the legal strategies we talk about.

 These techniques are very useful for parents and are also helpful for grandparent that wants to help fund a grandchild's college education. In many  states we can help you effectively implement the strategies we discuss.

Generic questions or comments can be directed to us here on the blog or contact us through the following methods.
To call    614-264-3864
to email  financial-services@live.com
to visit website go to  http://financial-service6.wix.com/polarisfinancial

Would you be interested in 6.25% for 34 yrs?

Would you  be interested in turning $383,000 into a guarantee income stream for 34 year and paying a total of $1,607,000. The transaction is only available to one client. when its sold its  gone. There are other similar deals available with diferent amounts, diferent payment schedules, various durations and different  nominal interest rates. Smaller deals are also available.  The payment streams are guaranteed by Billion dollar  Insurance Companies that are highly rated and very well known.  This particular opportunity is issued by an A rated American insurance company.

Whats  the  catch?
You  must qualify to purchase the  deal.
You must have adequate liquidity to afford the transaction.
You get a schedule of monthly income checks thats is modest for the  first 14 years then increases every year until the maturity in 2047
You  cant change the monthly payment amounts. The  payment schedule is available for  review
You must have a very long term focus.

Im guessing the ideal client would be a professional with  high net worth possibly a lawyer, doctor or business owner.  Possibly utilizing IRA,  SIMPLE, SEP or 401K assets. Imagine a $1.2 M  plus gain in a ROTH!  It could be a younger sucessful individual or an older client looking to  fund a Mult-generational Family or charitable trust!

What are  your  thoughts on  this  type of very long term transaction and  rate of  return??

Public comments can  be made here or 
serious inquiries would be best handled by email or phone

IS a 529 Plan Right for your situation

529 College Saving Plans

529 Plans for college saving. There are numerous questions about saving for college. I believe that for many people the best ways to save for college are not in a 529 Plan. Many State plans have produced DISMAL results.. Previous news reports in the Columbus Dispatch have detailed poor performance in the Ohio plan even before the recent Market meltdown. Many states plan participants tend to invest in age based formula driven plan options with less risky products receiving a greater percentage of the funds as the students get closer to College age. That is a good idea but it may not be enough. With a 40% loss or more some plans are not likely to have enough time to fully recover before the funds are needed. She also adds that many families have had to cut back on funding the plans because of tight budgets in general.

It is important to continue saving something every month even if it is only $25 a pay period. You cannot alter investment allocation for existing funds in the plan more than once per year. Even though you may not be able to reallocate the existing funds you can immediately allocate the new contributions however you wish.

529 Plans have high funding limits. You can actually set aside $250,000 for your childrens education Tax free. Unfortunately if your children do not use the funds you will get penalized when you withdraw the funds. In some ways using a ROTH is better but the maximum contributions are much lower. You also have much more investment or savings flexibility with the ROTH

Newspaper Article on Rolling Over 401 K Plan

Yesterdays Columbus Dispatch had an article by Mark Miller called "Rolling over 401(K ) might not be best." Mark's article talks about a hypothetical investment scenario in which an employee quits their former employed and either leaves the funds in the 401 K plan or removes the funds and rolls them into a self directed IRA. In this hypothetical situation the funds have grown to $1.13 /M in the self directed plan and $1.25 in the Employers plan. It is conceivable that the employers plan will outperform the individual plan, however it is equally conceivable that the employers plan will underperfom the individuals plan. This would appear to be a coin toss to me.

What is certain is that you have far less control over the plan assets if you leave it in a former employers 401 K Plan. The Employer may at some future date decide to toss you out of the plan as once happened to me. This was a purely arbitrary decision on their part and had nothing to do with anything I did or said within the 401 K Plan. Secondly they may decide to arbitrarily impose fees on your plan participation which we have seen happen. Third, depending on how you left or were forced out you might or might not want to provide any benefit to the former employer by helping them get more discounts in fees because of the larger asset base under management. Fourth, the employer may not permit you to utilize some very attractive product options that are not currently offered in most corporate 401 K plans.

Federal rules require that they give you several plan options. Some low risk usually low growth option, some moderate risk moderate growth options, and usually some higher risk high potential growth options. What these plans generally do not provide is a no risk of market downturn product with a guaranteed rate of return that also offers significant upside potential for double digit returns. Clients over 40 can guarantee themselves an increase in their Income account Value of 6 or even 7.2% per year as their worst case scenario. This is independent of market increases or market decreases. Every years gains are locked in and the worst case is that you double your money in 10 years and quadruple your money in 20 years. I have never seen this offered in any of the corporate plans that I have had a chance to review. It is available for small corporate plans or for individual 401 K Plans or rollover IRA plans. In addition a separated employee who is consulting during a time of transition or permanently after a corporate downsizing can utilize these products. Notice I say downsizing not rightsizing because these corporate barons never seem to be able to get it right. Why would you want to let them continue to have any control over your hard earned assets anyway?

One more set of benefits if we set up a small business 401 K Plan.
1 The Plan costs are reasonable.
2 The client can add much more to their own 401 K or SIMPLE Plan than they could ever save in an IRA
3 The client can set up a hybrid plan that combines funding both a ROTH and Traditional version of their very own 401 K Plan. Although this is legal most corporate plans do not offer this option.
4 If you choose to set up your own plan a direct rollover is a tax free event.
5 It is possible to set up a plan where you will never see a loss in principle due to market turbulence
6 You can split the assets into two categories one with Zero risk of market loss, and the other can be invested as you wish.
7 YOU DECIDE! You are in control!

If any of this is interesting to you feel free to contact us to determine how we can help you implement this alternative to leaving your funds in a former employers plan.
How can we help you?

www.columbusfinancialplanningpros.com
polarisfinancialservices@live.com

Struggles saving for retirement and college

A recent Putnam Investments Reseach Study has confirmed what many of us already know. In the absence of a true pension plan at work saving for a young childs college education at the same time we are trying to save for our own retirement is a daunting challenge! To make matters worse, almost 50 private lenders and non profit lenders have quit writing student loans in the past year. Some of this is aggravated by the bank lending mess we are currently in. Some of todays headlines suggest that the mortgage lending mess is not yet at the bottom.

Now more than ever we need to be able to look at all possible avenues for obtaining college funding. We need to be thinking scholarships and grants first, followed by maximizing our eligibility for Need Based Financial Aid. Some forms of Financial require repayment and some do not require that the money be repaid.

Several dozen extremely well endowed colleges and universities are prepared to guarantee that if you are admitted. you will be able to graduate Student debt free. You will still have to contribute the Expected Family Contribution (EFC) but after that the College or University is prepared to kick in enough Financial Aid or Work Study income to allow the student to graduate without student loans.

There are perfectly legal techniques that we can often use to increase a students eligibility for Need Based Financial aid. That is one of the services that we offer our clients.