FINRA’s Tips to Make Smart Savings for Education

Posted on August 12th, 2019 at 4:44 PM
FINRA’s Tips to Make Smart Savings for Education

From the Desk of Jim Eccleston at Eccleston Law LLC:

Saving for education is critical for many families. FINRA offers these eight tips to help you make smart 529 savings plan choices:

  1. Start with your home state first when looking for a 529 savings plan. Pay special attention to state tax breaks and fees that are waived or lowered for in-state residents. Do some research to see if there are other state benefits available to you.
  2. Consider the plan's investment options. If you intend to use a 529 savings plan for K-12 tuition, keep in mind that your timeframe will be shorter than those who are saving only for college. This will likely impact your investment choices and the level of investment risk that might be appropriate for your circumstances.
  3. Be aware that plans sold by brokers and advisers are generally more expensive than direct-sold plans sold by a state. If you're comfortable choosing a plan and selecting your investment options on your own, you can often save money investing in a direct-sold plan.
  4. Compare expenses, especially if your state offers both advisor-sold and direct-sold plans and if you are considering investing in an out-of-state plan. If the 529 plan has share class options, do a cost comparison of those options based on how long you intend to hold funds in the plan before using them to pay for educational expenses. Refer to the plan's offering document to research expenses and share class options. Compare 529 plan fees and expenses using FINRA's 529 Expense Analyzer.
  5. One size does not fit all. Some brokerage firms and advisers offer only one or a very limited number of 529 plans. They may not provide investors the opportunity to invest in 529 plans issued by other states, even though those plans may have lower sales loads and lower expenses, provide state tax advantages that are absent from the plans being offered, or have investment options that you might prefer.
  6. Ask questions. If you are investing on your own, call the toll-free numbers posted on the state-sponsored sites.
  7. Independently verify sales information you receive by thoroughly reading the official disclosure documentation offered by the 529 plan. Brokers are required to provide this documentation to you, and it may also be available on the MSRB's EMMA website.

8. Make sure the investment meets your objectives and that you understand and are comfortable with the risks, costs and liquidity of the investment. Never invest in a product you don't understand.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, finra, smart savings, education, savings tips

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