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Promoting The Hartford SMART 529

Messages that resonate with clients and materials you can use now.


Tax Season Tools: Saving for College with SMART529

 

We offer client materials to help you communicate the value of 529 college savings.

Client post card - order now and mail to your clients who don't have a 529 in place for each child in their family and/or who may be saving in taxable accounts.

Tip: Follow up with a phone call:

529 earnings accumulate federal income taxes deferred and will be waived if used for qualified higher education expenses. Qualified expenses include tuition, room and board, required school fees, books and supplies, computer and related expenses such as internet fee and school required software.

If your clients reside in or have taxable income in a state other than West Virginia, they should consider whether their state has a qualified tuition program that offers favorable state income tax or other benefits exclusive to their state's program that are not available under the SMART529 program.

 

Tax and Other Tips... Do You Have Clients Who May Benefit from 529 College Savings?

529 TAX TIPS

Start Early

The best time to start a 529 plan is when your clients' children are born.  Encourage the to get an early start by opening up an account as soon as they secure their children's social security number. The benefit?  Getting an early jump on 529 college savings means that the investments may grow with federal tax deferred for a longer time period. The earlier they start saving, the greater the opportunity to meet college savings goals.

Involve the Family

Studies have shown that extended family members are frequently very willing to contribute to a child’s 529 plan. Have your clients make their families aware of online savings coupons and gift receipts.  For families who are particularly willing, let them know that they can contribute automatically from their bank accounts on a regular basis through the Automatic Investment Program.


For Your clients Who are Grandparents...

Grandparents can benefit from contributing to a grandchild’s 529 account – 529’s are great estate planning tools.  Grandparents may make lump sum gifts to 529 plans they open for their grandchildren, in the amount of $13K (or $26k per married couple) per year in each account (this is the federal non-taxable gift limit for 2010).  They may also take advantage of a special provision which allows them to frontload a 529 plan in the amount of $65k (or $130K per married couple) per beneficiary, which is then treated as though it were made over five years, and is not taxable.  This helps to reduce the size of their estate (potentially reducing the tax liability), while allowing them to maintain control of the account.*

 

UTMA/UGMA Accounts

Have your clients opened up UTMA/UGMA accounts for children and then regretted the loss of control?  One solution, since these accounts are irrevocable gifts, is to move the money from such accounts into a 529 plan. The 529 account is then marked as an UTMA/UGMA account for use on behalf of the child, but the funds must ultimately be used for eligible higher education expenses. Non-qualified withdrawals are taxable as ordinary income to the extent of earnings and may also be subject to a 10% federal income tax penalty. Such withdrawals may have state income tax implications.  Have your clients consult with their tax advisor for more information.

 

Small Business Owners

For clients who have sold a business or property that will create a large cash inflow, encourage them to consider 529 accounts for children or grandchildren, particularly if the future intent is for the children to benefit from their estate. As mentioned above, they may take advantage of a special provision allowing them to frontload a 529 plan in the amount of $65k (or $130K per married couple) per beneficiary, which is then treated as though it were made over five years, and is not taxable (it is considered a completed gift).* They may receive a state tax deduction now; and the money grows federal income tax deferred and tax free if used for qualified educational expenses, and they still control the account.

*If the donor elects to treat a gift as being made over five years, and the donor dies prior to the end of that five-year period, the portion of the gift allocable to the period after the donor’s death will be included in the donor’s estate. Estate-tax treatment may differ by state. Any additional gifts to the same Designated Beneficiary in that five-year period would be subject to federal gift tax. Please have your clients consult their tax advisors for more information.

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SMART529 West Virginia board logo

SMART529 is offered by the West Virginia Prepaid Tuition and College Savings Program Board of Trustees and is administered by Hartford Funds Management Company, LLC (“HFMC”).

Investments in SMART529 are not guaranteed or insured by the State of West Virginia, the Board of Trustees of the West Virginia College Prepaid Tuition and Savings Program, the West Virginia State Treasurer's Office, HFMC, The Hartford Financial Services Group, Inc., the investment sub-advisors for the Underlying Funds or any depository institution and are subject to investment risks, including the loss of the principal amount invested, and may not be appropriate for all investors.

The Hartford SMART529 is available to all investors. West Virginia (WV) provides certain tax advantages to WV taxpayers that invest in The Hartford SMART 529. Before investing, an investor should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s 529 plan.

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, your clients should consult their own tax or legal counsel for advice.

Investors should carefully consider the investment objectives, risks and charges and expenses of SMART529 and its Underlying Funds before investing. This and other information can be found in the Offering Statement for SMART529 and the prospectuses or other disclosure documents for the Underlying Funds. Please read them carefully before investing or sending money. SMART529 college savings plans are distributed by Hartford Funds Distributors, LLC. Member SIPC

"The Hartford" is a registered trademark of Hartford Fire Insurance Company.

"SMART529" is a registered trademark of West Virginia Prepaid Tuition and College Savings Program Board of Trustees.

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries.