Home

Campus Closed, College Refunds and My 529 Plan

529planRefunds

 

Did the recent coronavirus outbreak close your educational institution? Did you pay for your expenses with funds from a 529 plan? It is important to understand how you will be affected if this applies to you.

The recent Covid-19 outbreak has forced the closure and move to online classes for many educational institutions. They are going to be processing reimbursements for room and board, tuition, and other expenses due to the closure of their campuses. This complicates things for those that may have paid for these expenses by using their 529 plan. Typically, you can only use funds from your 529 to pay for expenses incurred in the current year. Funds withdrawn in excess of the expenses incurred would be considered a non-qualified distribution. This type of distribution would be taxable plus a 10% penalty at the beneficiary’s tax rate.

Families that have or are expecting to receive a refund should understand what options they have to avoid an unnecessary tax. In most instances you would have 60 days, from the point you receive the refund, to return the unused portion of the funds that have been withdrawn from the account to avoid the tax. The IRS has recently issued guidance under the CARES Act that although the 60 days window still applies, a beneficiary that received a refund after February 1, 2020, will have until July 15, 2020, to return the funds to their 529 plan.

It is important that you do not return more than the refund to the plan. The additional amount will be considered a new contribution. You must also return the funds to an account for the same beneficiary, so make sure you are returning it to the right account. The option to keep the refund is possible, but it will then be considered a non-qualified distribution which will be taxed as mentioned above.

You will want to make sure that you have an accurate accounting of what has taken place. It is advised that beneficiaries and account owners document all the transactions that have happened with the 529 plan if you need to justify how the refund was handled. Having this documentation could ultimately help you avoid unnecessary tax and penalties.

It is highly recommended that you contact your 529 plan provider and accountant to learn the steps needed for returning the funds to your account. This will assure that you handle it the right way and your tax advisor is aware you have returned the funds. Both will also know that you are returning these funds and it should not be treated as a new contribution.

We would be happy to discuss your situation regarding refunds you have received back from your qualified educational institution if you had paid them with assets from a 529 plan. Just contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time for this review. Be sure to share this article with friends, family, and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

What is the Dow?

DowJonesstock

The markets have been in focus recently due to the coronavirus pandemic and its impact on the economy. There is much focus place on what the media outlets call the “Dow” and we wanted to take this opportunity to clarify “What is the Dow?”

The Dow Jones Industrial Average (DJIA), or Dow for short, is an index that tracks 30 large publicly traded companies that trade on the New York Stock Exchange (NYSE) and the NASDAQ. Yes, you read that right, this index tracks only 30 companies. Does following the ups and downs of the Dow make sense for you, your portfolio or the markets in general? I would argue that it simply gives you a good view of large companies and it is not a broad enough index to benchmark most portfolios that take a true asset allocation approach. We discussed it recently in our Mitlin Minute, What is the Dow?.

Those that have a diversified portfolio will have exposure to assets that will not benchmark well against the Dow. As an example, companies in the small-cap, mid-cap and international markets will not be represented well by this index.

The Dow is a good indicator of how a small number of the largest publicly-traded companies are performing, but not of the broader markets as a whole. It is important to have appropriate benchmarks to compare your portfolio to and the Dow may provide that for a portion of your holdings, but not all of them. We use several benchmarks to compare portfolios and each one needs to be reviewed and compared to the holdings that are most like the benchmark, otherwise, it is meaningless data.

Make sure you understand how your portfolio is positioned and the best ways to benchmark how your assets are performing. The Dow has very little correlation with a portfolio that has a vast majority of assets not in large-cap companies and will not provide you with a good indication of how your portfolio is performing during bull or bear markets.

We would be happy to discuss your situation regarding the benchmarks being used to evaluate your portfolio and what indexes would be most relevant to you. Just contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time for this review. Be sure to share this article with friends, family and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Lawrence Sprung Named a Member of the Male Ally Network at Females & Finance

Females & Finance

 

Larry is proud to be named a member of the Male Ally Network at Females & Finance and to join these other great men in supporting the platform to grow better businesses together in financial services and financial technology. 


UL: Darrell Hickerson with Females And Finance and Unified Financial Network
UC: David Wood of Gateway Financial Partners
UR: Noel Evans of Long Term Care Solutions
CL: Aaron Klein of Riskalyze
CR: Marcus Burns of PNC
LL: Lawrence Sprung, CFP® of Mitlin Financial, Inc.
LC: Gary O. Clement, CFP®, CRPS®, CRPC®, AFC®, MPAS® of Clement Asset Management
LR: Daniel Bolton of Riskalyze
 
 
This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

CNBC Appearance by Lawrence Sprung

  CNBC Photo

 

Larry Sprung had the pleasure of sitting down with Sharon Epperson in the CNBC studios on Thursday, February 27, 2020 to discuss the topic of Adulting.

𝗜𝗳 𝘆𝗼𝘂 𝗺𝗶𝘀𝘀𝗲𝗱 𝘁𝗵𝗲 𝘀𝗲𝗴𝗺𝗲𝗻𝘁 𝘆𝗼𝘂 𝗰𝗮𝗻 𝗿𝗲-𝘄𝗮𝘁𝗰𝗵 𝗶𝘁 𝗵𝗲𝗿𝗲

mitlin.us/CNBCsegment

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Signing Your Important Documents in 2020

2020 Photo

 

The New Year, 2020, has gotten off to a great start and it has also raised some interesting questions when it comes to signing important documents. Many of us would typically sign documents this year using the shorthand “20” to represent the year 2020, but this could put you at major risk if you do.

Simply using the “20” when dating will leave your important documents susceptible to someone changing the date. Imagine you sign a legal document with a vendor or someone doing work on your home and you place the date 1/2/20, which seems harmless enough. In truth, this is not a big deal unless an issue arises or someone decides to change the date to read 1/2/2018.

As you can see, it is really simple for someone to change the date you signed the document. All they need to do is add the two numbers at the end and it looks as though the document had been signed years earlier. This could present an opportunity for scammers to utilize this to their advantage.

There is an easy way to protect yourself against this issue. When dating documents, legally binding or otherwise, we would suggest writing out the whole date. In the example above, just write 1/2/2020 and this should insulate you from the majority of issues.

Keep in mind, there are scammers out there that will try to alter dates regardless of how you write them and even doing this may not prevent that. The idea here is to make sure you do what you can in order to minimize the risks to you and your family. Do not take any shortcuts this year when dating documents.

Little things like dating documents are sometimes overlooked. We are here to make sure you are protected as best you can be and that is why we share tips like this. Feel free to contact us with any additional questions you may have on this topic or any others we have written about. We welcome the opportunity to connect and can be reached at (844) 4-MITLIN x12.

Be sure to share this article with friends, family and business acquaintances who might be interested too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

More Articles ...

@MitlinFinancial