The Wall Street Journal reported recently that over 93% of the 529 Plans lost money during the past year and over 1/3 of the plans lost over 40%. Is it a poor enough record to demand a bailout? Let's look at the eveidence and you make the decision.
Here are some reasons to support a bailout
1) Families were enticed to invest in 529 Plans because of the tax benefits.
2) Chances of a financial collapse were never discussed over even mentioned.
3) There were virtually no financial suitability checks. Just go to the State's 529 Plan website and sign up.
4) Alternative guaranteed tax free programs were never provided as an option.
5) The Wall Street Journal reported that many of the plan designs were too risky.
6) The Wall Street Journal also reported that many of the plans were poorly managed
7) There was a conflict of interest since states benefited financially from the purchase of the 529 Plans.
8) It is almost impossible to recover the losses because students have a very short period of time to take advantage of the tax benefits.
One important question to consider is why should Congress bail out 529 Plans. Have the halls of Washington received any large donations from 529 families? Money talks in Washington. Why do you think AIG was bailed out. It wouldn't be because AIG insures the Congressional retirement plans would it? But you make up your own mind about the chances for a 529 bailout.
Homer Sweeney
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