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How to Ease the Costs of College · Money In Motion with Klaas Financial

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  Speaker 1: And our phone lines are open for you right now
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  Speaker 1: six SOH eight three two one thirteen ten. That's six
• 0:06
  Speaker 1: eight three two one thirteen ten. If you've got questions
• 0:09
  Speaker 1: for our retirement planning professionals from Class Financial, love to
• 0:12
  Speaker 1: have you join us this morning. Anything retirement related, We'd
• 0:15
  Speaker 1: love to have you get on the air again telphon
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  Speaker 1: number six so eight three two one thirteen ten. That's
• 0:20
  Speaker 1: six soh eight three two one thirteen ten. Be talking
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  Speaker 1: about college and college expenses and paying for those kiddos
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  Speaker 1: and grand kiddos, and what tuition is looking like these days.
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  Speaker 1: We'll get all the details from our retirement planning professionals
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  Speaker 1: going to be joined this week by CJ. Kloss and
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  Speaker 1: Eric Schwartz. Of course I mentioned Class Financial. I haven't
• 0:38
  Speaker 1: yet mentioned the website. It's important one cossfinancial dot com.
• 0:41
  Speaker 1: That's Coss klaas Financial dot com. Hope you get a
• 0:45
  Speaker 1: chance to stop on over there. Not only can you
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  Speaker 1: learn more about Coss Financial, they're separate divisions. You can
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  Speaker 1: learn about all the folks at Coss Financial. You can
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  Speaker 1: also sign up for the weekly Market Pulse newsletter available
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  Speaker 1: to you online at cossfinancial dot com. There're TELP number
• 0:57
  Speaker 1: six so eight four four two five six three seven.
• 1:01
  Speaker 1: No charge for that initial get to know your appointment
• 1:03
  Speaker 1: tech COLSS Financial. It will be complimentary to you again
• 1:06
  Speaker 1: their number six oh eight four four two five six
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  Speaker 1: three seven, as mentioned, joined this morning by Eric Schwartz
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  Speaker 1: and CJ Claus and CJ.
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  Speaker 2: How you doing todayep? Oh, well maybe I think we
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  Speaker 2: maybe waiting. Oh, there we go. We gotta think. CJ's
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  Speaker 2: joining us in just a moment. Eric, how have you been?
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  Speaker 2: We get to go to you first this week.
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  Speaker 3: I'm doing I'm doing great. Sean, how you doing?
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  Speaker 2: I'm doing well. We knew it was gonna happen sooner
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  Speaker 2: or later. And it's good to talk with you. And uh,
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  Speaker 2: we've got an exciting show ahead. And CJ joins us
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  Speaker 2: this morning as well, CJ. How you doing this week?
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  Speaker 4: I'm doing great. Sean?
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  Speaker 2: How are you? I'm doing good?
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  Speaker 1: Good to talk with both of you, and again we've
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  Speaker 1: got an exciting show ahead. And one of the cool
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  Speaker 1: things too, is it always pays to listen closely to
• 1:46
  Speaker 1: the program. You get some fantastic information, a lot of
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  Speaker 1: great knowledge stuff you can use also an opportunity to
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  Speaker 1: win with the money and motion listener question of the
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  Speaker 1: Class Quiz question of the week.
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  Speaker 2: We'll do the listener question corners. We'll talk about that
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  Speaker 2: a little.
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  Speaker 1: Bit later, but the Class Quiz Question week your chance
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  Speaker 1: to win a fantastic prize this week. No exception, our
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  Speaker 1: friends from Class Financial I provided a twenty five dollars
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  Speaker 1: gift card to Chewy. Tell you a bit later on
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  Speaker 1: on all the specifics on how you can win with
• 2:11
  Speaker 1: the Class Quiz Question League little tip doll Oftentimes, both
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  Speaker 1: the question and answer come up during each week's program,
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  Speaker 1: so it's definitely beneficial to pay close attention before we
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  Speaker 1: get rolling on this week's conversation about college and tuition
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  Speaker 1: and expenses related to that, Let's actually roll back and
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  Speaker 1: take a look at last week's program. Get the question
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  Speaker 1: and answer there as well.
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  Speaker 3: Eric absolutely well. I think we joked a few weeks
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  Speaker 3: ago that sometimes the questions aren't super hard, but last
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  Speaker 3: week it was a it was a difficult one, I
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  Speaker 3: might even say a trick question. So thank you everybody
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  Speaker 3: for listening. Unfortunately, we did not have a winner last week.
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  Speaker 2: Oh my goodness, I know, I know.
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  Speaker 3: The question was if you are fifty five years old
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  Speaker 3: in twenty twenty five. What is the maximum you can
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  Speaker 3: put away into your four to oh one K plan
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  Speaker 3: at work? And we give two choices either twenty three
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  Speaker 3: thousand or thirty thousand, five hundred. The answer is actually
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  Speaker 3: none of the above. The correct answer was thirty one thousand.
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  Speaker 3: So really a trick question there.
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  Speaker 1: That is great, not great that that we didn't have
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  Speaker 1: a winner. But I do like that.
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  Speaker 2: I do like that.
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  Speaker 1: Again, you've got to pay close attention. I know, some
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  Speaker 1: of them, as you mentioned, Eric, can be a bit
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  Speaker 1: of layups, and if you pay even a little bit
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  Speaker 1: of attention, you generally get the idea. But again it's
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  Speaker 1: definitely important to pay attention to the shows. And again
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  Speaker 1: we'll have a chance for you to win a twenty
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  Speaker 1: five dollars gift card to Chewy a little bit later
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  Speaker 1: on in the program. So today we're going to be
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  Speaker 1: digging into it's a big topic that you know a
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  Speaker 1: lot of folks think about, which is education planning for
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  Speaker 1: the kids and the grandkids and college. It's never been
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  Speaker 1: quote unquote cheap, but it's definitely becoming quite expensive, rising costs.
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  Speaker 1: It can get overwhelming.
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  Speaker 2: CJ.
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  Speaker 1: You know, what should families know as they kind of
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  Speaker 1: begin this process and start working through this important step
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  Speaker 1: in life.
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  Speaker 4: Yeah, you're right, Sean. This is this is definitely a
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  Speaker 4: topic that brings a lot of stress to parents and grandparents.
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  Speaker 4: So today we thought we'd walk through a bit of
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  Speaker 4: a reality check on where college costs stand and how
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  Speaker 4: that intersects with your broader financial plan. So, even though
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  Speaker 4: our primary focus is helping clients prepare for retirement, we
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  Speaker 4: do often see education planning for children or grandchildren overlapping
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  Speaker 4: with the retirement planning goals, especially when families are trying
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  Speaker 4: to save for both college and their retirement at the
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  Speaker 4: same time. So here's a quick snapshot of why this matters.
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  Speaker 4: Over the last thirty years, average tuition and fees of
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  Speaker 4: public four year colleges have jumped one hundred and twenty
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  Speaker 4: five percent after adjusting for inflation. Now, this is a
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  Speaker 4: long time, thirty years after over the last thirty years,
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  Speaker 4: the average tuition and fees, but it's jumped one hundred
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  Speaker 4: and twenty five percent after adjusting for inflation. You get
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  Speaker 4: the idea, right, So if I inflation adjusts my dollars
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  Speaker 4: moving forward, they're still not buying me the same goods
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  Speaker 4: and services. The cost has more than doubled even after
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  Speaker 4: I reduce it for inflation. So another way of thinking
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  Speaker 4: about this is private college costs have gone up about
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  Speaker 4: eighty percent, but during that same timeframe, the median family
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  Speaker 4: income has only risen about twenty seven percent. So no
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  Speaker 4: wonder why families are feeling the pressure. Now, when you're
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  Speaker 4: trying to estimate what college cost might actually cost for
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  Speaker 4: your student, it's not just about the sticker price. It
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  Speaker 4: actually varies depending upon your financial situation, academic merit, family size,
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  Speaker 4: tax filing status, and even your location. So this is
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  Speaker 4: where it gets tricky. Right. We just said average costs
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  Speaker 4: have jumped well above what the median family income has jumped.
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  Speaker 4: But then we also threw in there kind of a
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  Speaker 4: curve ball, which is but you can't just look at
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  Speaker 4: the sticker price. You have to actually understand what it
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  Speaker 4: means for your student. So here's a few tools and
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  Speaker 4: steps to help guide you. Number one, start with College Scorecard.
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  Speaker 4: You can go to College Scorecard dot ed dot gov.
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  Speaker 4: So College Scorecard dot ed dot gov and it's a
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  Speaker 4: fantastic resource from the Department of Education. You'll find information
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  Speaker 4: on costs, graduation rates, typical earnings after graduation, and even
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  Speaker 4: a net price calculator for most schools to help you
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  Speaker 4: personalize the numbers to again your student based in your
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  Speaker 4: family situation. Number two, fill out the FAFSA, so that
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  Speaker 4: stands for the Free Application for Federal Student Aid. It
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  Speaker 4: asks for income and asset information from both parents and students,
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  Speaker 4: and keep in mind that income has weighted more heavily
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  Speaker 4: than assets in the formula, and once you submit, you'll
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  Speaker 4: get what's now called the Student Aid Aid Index. This
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  Speaker 4: used to be called, by the way, the Expected Family
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  Speaker 4: Contribution the EFC. Now it is called the student aid Index.
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  Speaker 4: Now it's basically the same thing. But that index then
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  Speaker 4: sets a watermark whereby you're not going to get any
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  Speaker 4: financial aid from the government unless the cost of the
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  Speaker 4: school exceeds that number. So think of it as you
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  Speaker 4: fill out the FASA and it says your student aid
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  Speaker 4: indexes I don't know, let's call it eighty thousand dollars.
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  Speaker 4: Then you're not going to get any financial aid even
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  Speaker 4: availability unless the cost per year is over eighty thousand dollars.
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  Speaker 4: You see the point, So fill out that FATA, go
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  Speaker 4: through that process, and the number three would be to
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  Speaker 4: understand your financial need. The student aid index is subtracted
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  Speaker 4: from that school's cost. Now what's kind of interesting is,
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  Speaker 4: you know, tools like the college scorecard or the school's
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  Speaker 4: common data set can give you insights into how generous
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  Speaker 4: a particular college tends to be. But just because you
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  Speaker 4: show a financial need, So say your student at index
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  Speaker 4: is very low, we'll call it ten thousand dollars, and
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  Speaker 4: so anything over ten thousand dollars, you know, shows a
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  Speaker 4: financial need, it doesn't mean that the school has to
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  Speaker 4: fill that gap with you know, grants or scholarships or
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  Speaker 4: institutional aid. It could just go unfilled. So you're going
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  Speaker 4: to want to have an understanding of if you show
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  Speaker 4: a financial need, will the school cover that need, and
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  Speaker 4: if so, how and if not that school, what about
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  Speaker 4: other schools? So there you go. We're getting to a
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  Speaker 4: really complicated and expensive topic today, but it can be
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  Speaker 4: very meaningful to young family.
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  Speaker 1: Some great benefits out there as well, as long as
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  Speaker 1: you understand kind of how to work through it and
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  Speaker 1: understand what it actually all means. That's a great thing
• 8:39
  Speaker 1: about getting the chance to meet with us CJ and
• 8:41
  Speaker 1: Eric each and every week here with Money in Motion,
• 8:43
  Speaker 1: brought to you by Class Financial some always always some
• 8:46
  Speaker 1: fantastic information for you, don't forget. You can learn more
• 8:48
  Speaker 1: about Class Financial on their website COLSS financial dot com.
• 8:51
  Speaker 1: That's coss k l a A S Financial dot com
• 8:54
  Speaker 1: delphin number six. So eight four four two five six
• 8:57
  Speaker 1: three seven. No charge for that initial get to know
• 8:59
  Speaker 1: you appoyment tech Los Financial, It will be complimentary to you.
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  Speaker 2: So okay.
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  Speaker 1: So once we've got you know, an understanding of the
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  Speaker 1: likely cost, Eric, what the most common ways then for
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  Speaker 1: folks to start And I've right into your wheelhouse right here,
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  Speaker 1: I'll start saving and planning for those expenses.
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  Speaker 3: Yeah, I think it's safe to say the most common
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  Speaker 3: option for saving specifically for college at this point is
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  Speaker 3: a five to twenty nine plan. Now wisconsinights may know
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  Speaker 3: that better as Edvest or Tomorrow's Scholar. Those are the
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  Speaker 3: state specific programs that we have here in Wisconsin, but
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  Speaker 3: they all fall under the category of a five to
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  Speaker 3: twenty nine plan. So the reason that they're so popular
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  Speaker 3: is these accounts offer tax deferred growth and as long
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  Speaker 3: as the money is used for qualified education expenses, the
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  Speaker 3: withdrawals are actually tax free. So if you think about that,
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  Speaker 3: if you put one thousand dollars into one of these accounts,
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  Speaker 3: and then you know, over the years that the dollars
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  Speaker 3: are sitting there, you're not paying taxes each year on
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  Speaker 3: any of the interest or dividends. And then on the
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  Speaker 3: back end, when you take money out, any of that
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  Speaker 3: growth is still tax free. There's no federal contribution limit
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  Speaker 3: and no income limits for making contributions, so this kind of.
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  Speaker 4: Works for everybody, whether you have really low.
• 10:14
  Speaker 3: Or really high income. Many states offer a state tax
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  Speaker 3: deduction or a credit for contributions if you use the
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  Speaker 3: state plan. That is the case here in Wisconsin at
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  Speaker 3: Best in Tomorrow's scholar both have A five. You can
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  Speaker 3: can deduct up to five thousand dollars of contributions per
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  Speaker 3: beneficiary per year, so that can help you out on
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  Speaker 3: the state income tax return. And then the concern you'll
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  Speaker 3: sometimes hear is like, well, you know, what, if what
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  Speaker 3: can I actually use these dollars for? And we've seen
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  Speaker 3: that we've seen that definition expand quite a bit in
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  Speaker 3: recent years here and some recent legislative changes back in
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  Speaker 3: the Secure Act, made five and nine is even more flexible,
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  Speaker 3: so you can now use up to ten thousand dollars
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  Speaker 3: of A five twenty nine to repay student loans and
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  Speaker 3: then as a results of the tax cuts in Jobs Act,
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  Speaker 3: you can also use up to ten thousand dollars per
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  Speaker 3: year for K through twelve tuition, so it doesn't have
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  Speaker 3: to be a college program. Now, not all states will
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  Speaker 3: recognize that as a qualified expense, so check with your
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  Speaker 3: tax advisor. But like I said, we are seeing the
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  Speaker 3: the definition of what qualified expenses are expand quick.
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  Speaker 1: Oh that's good news to hear as well. As we
• 11:28
  Speaker 1: talked this morning with Eric Schwartz and CJ.
• 11:30
  Speaker 2: Closs.
• 11:31
  Speaker 1: They are our retirement planning professionals from Coss Financial. Their
• 11:34
  Speaker 1: website it is Cossfinancial dot com. That's Coss k l
• 11:38
  Speaker 1: aas financial dot com. Great place to learn more about
• 11:41
  Speaker 1: Coss Financial. You can also listen back to this in
• 11:43
  Speaker 1: previous shows podcast as well. Again, those all available to
• 11:46
  Speaker 1: you at Cossfinancial dot com. Tel for number six soh
• 11:49
  Speaker 1: eight four four two five six three seven. No charge
• 11:52
  Speaker 1: for that initial get to know you appointment at Coss Financial.
• 11:54
  Speaker 1: It will be complimentary to you. Again that number six
• 11:57
  Speaker 1: oh eight four four two five six three seven just
• 12:00
  Speaker 1: mentioned those five twenty nine plans. What if your kid
• 12:03
  Speaker 1: doesn't good grant kid or grand kid doesn't go to
• 12:05
  Speaker 1: college or there's money left over. We'll get some of
• 12:07
  Speaker 1: the details on that next as Money in Motion with
• 12:10
  Speaker 1: COSS Financial continues right here on thirteen ten, Wiba talking
• 12:14
  Speaker 1: with our retirement planning professionals from Class Financial, CJ. Closs
• 12:17
  Speaker 1: and Eric Schwartz. Of course they mentioned they come to
• 12:19
  Speaker 1: us from Class Financial. I hope you have a chance
• 12:21
  Speaker 1: to get over to the website cossfinancial dot com. That's
• 12:24
  Speaker 1: coss k l aasfinancial dot com. Great place to learn
• 12:28
  Speaker 1: more about CJ, Eric and the whole team at COSS Financial.
• 12:31
  Speaker 1: Also an opportunity there. Signed up for the weekly market
• 12:34
  Speaker 1: Paul's newsletter. It's a nice weekly email. Gives you a
• 12:36
  Speaker 1: linked in the most recent podcast. Also snapshot of what's
• 12:39
  Speaker 1: been going on in the markets. Again, that available to
• 12:41
  Speaker 1: you at cossfinancial dot com. Speaking of things available to you,
• 12:44
  Speaker 1: the telephone number six oh eight four four two five
• 12:47
  Speaker 1: six three seven. Don't forget no charge for that initial
• 12:49
  Speaker 1: get to know you appointment at CLSs Financial. It is complementary. Again,
• 12:52
  Speaker 1: they're telephone numbers six O eight four four two five
• 12:55
  Speaker 1: six three seven. Talking college tuition this morning on the program,
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  Speaker 1: and just before the break, Eric had laid out the
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  Speaker 1: five twenty nine plans. I think a lot of folks
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  Speaker 1: are are familiar to some degree about them, and laid
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  Speaker 1: out some of the some of the really great benefits
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  Speaker 1: of making use to them, and how they're becoming more
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  Speaker 1: and more useful and CJ. What let's let's play out
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  Speaker 1: a scenario where maybe your child or grandchild doesn't go
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  Speaker 1: to college, they take a different life journey, or maybe
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  Speaker 1: they they do go to college, but there's still money
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  Speaker 1: left over in the five two nine.
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  Speaker 4: What happens then we suggest you just force them to
• 13:30
  Speaker 4: go Yes, exactly, that's kidding. Yeah, that's the question of
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  Speaker 4: what to do with these unused funds. It's probably, you know,
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  Speaker 4: one of the most common and valid concerns that we hear.
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  Speaker 4: But there are some great options. So even though contributions
• 13:44
  Speaker 4: are considered completed gifts to the beneficiary, the account owner
• 13:50
  Speaker 4: still has control. So think of this as I'm gonna
• 13:53
  Speaker 4: I'm gonna use my children's five twenty nine I when
• 13:56
  Speaker 4: I put money into their five twenty nine plans, there's
• 13:58
  Speaker 4: gifting rules you I want to know what those rules are.
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  Speaker 4: We've dedicated probably a dozen entire shows to the gifting rules.
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  Speaker 4: But I complete a gift into the five twenty nine
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  Speaker 4: plan for the beneficiary, I'll say my oldest daughter. Now,
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  Speaker 4: even though I've completed that gift into that account, I
• 14:16
  Speaker 4: remain in control of when money comes out of that
• 14:19
  Speaker 4: account and who the beneficiary actually is. So I can
• 14:22
  Speaker 4: change the beneficiary if I wanted to, to another eligible
• 14:25
  Speaker 4: family member, or even to myself or a niece or
• 14:29
  Speaker 4: a nephew or whoever, so that they can pursue education further,
• 14:33
  Speaker 4: So good news is it doesn't have to be used
• 14:35
  Speaker 4: for that original beneficiary. And if you don't end up
• 14:38
  Speaker 4: using the money for qualified expenses and you pull the
• 14:41
  Speaker 4: money out, just say, because you ah, you know this
• 14:44
  Speaker 4: money can't be used for anybody, I'm just going to
• 14:45
  Speaker 4: pull it out for myself. Just know that only the
• 14:49
  Speaker 4: earnings are subject to a ten percent penalty and federal
• 14:54
  Speaker 4: income tax. Some states might tax the earnings to to
• 14:59
  Speaker 4: recapture some of the lost state income tax, but that
• 15:01
  Speaker 4: depends on your state. So I mentioned you can change
• 15:04
  Speaker 4: the beneficiary to yourself. The only reason you want to
• 15:08
  Speaker 4: do that is if you have qualified education expenses you
• 15:11
  Speaker 4: want to pay for. But if you just pull the
• 15:13
  Speaker 4: money out to yourself, whether the beneficiary or not. And
• 15:16
  Speaker 4: you say, ah, I'm not going to use it for
• 15:17
  Speaker 4: qualified purposes for anybody. Well, that's where the growth suddenly
• 15:22
  Speaker 4: becomes subject to federal income tax, potentially state income tax,
• 15:26
  Speaker 4: and a ten percent penalty, which all I would say
• 15:28
  Speaker 4: to you, all is less than ideal.
• 15:30
  Speaker 1: I was watching college football over this past weekend and
• 15:33
  Speaker 1: they highlighted a seventy It was a seventy two year
• 15:37
  Speaker 1: old freshman on one of the marching bands.
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  Speaker 2: So you mentioned, see, yeah, you.
• 15:42
  Speaker 1: Never know, you never know when some of these things,
• 15:45
  Speaker 1: you know, if it's never never better late than ever.
• 15:47
  Speaker 1: And of course you mentioned you know some of the
• 15:49
  Speaker 1: options with five two nines and some of the ways
• 15:52
  Speaker 1: that it can be used as well. Really fascinating stuff.
• 15:54
  Speaker 1: This is fun topic and an important topic as well.
• 15:57
  Speaker 1: Of course I kind of scratched the surface on on
• 16:00
  Speaker 1: these conversations.
• 16:01
  Speaker 2: There's a lot to it. Don't forget.
• 16:02
  Speaker 1: If you missed part of the program you want to
• 16:04
  Speaker 1: learn more, you can always head on over to cossfinancial
• 16:06
  Speaker 1: dot com. That's Coss k l a A S Financial
• 16:08
  Speaker 1: dot com. Great data. Start that conversation pick up. Phe
• 16:11
  Speaker 1: gave a call six O eight four four two five,
• 16:13
  Speaker 1: six three seven. Don't forget that initial get to know
• 16:15
  Speaker 1: you appointment at COSS Financial. It will be complimentary to
• 16:18
  Speaker 1: you again their number six oh eight four four two
• 16:21
  Speaker 1: five six three seven. So as we kind of talk
• 16:23
  Speaker 1: then about about five two nines and uh and uh
• 16:27
  Speaker 1: some of the options there, let's kind of get in
• 16:29
  Speaker 1: a little bit more to that, CJ. What are some
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  Speaker 1: of the new options that are out there for some
• 16:34
  Speaker 1: of those unused funds.
• 16:36
  Speaker 4: Yeah, so some of you right now are who know
• 16:39
  Speaker 4: about the new options, are going Wait, they're not talking
• 16:42
  Speaker 4: about the new options, So don't worry. We know this
• 16:44
  Speaker 4: is one of the more exciting changes that that happened
• 16:47
  Speaker 4: under Secure Act two point zero that began back in
• 16:49
  Speaker 4: twenty twenty four. You can now roll over unused five
• 16:52
  Speaker 4: twenty nine funds into a roth IRA for the beneficiary
• 16:56
  Speaker 4: as long as you follow some rules. So number one
• 17:00
  Speaker 4: is the five twenty nine must have been open for
• 17:03
  Speaker 4: at least fifteen years rule number two. You can roll
• 17:07
  Speaker 4: over up to the annual roth IRA contribution limit currently
• 17:11
  Speaker 4: seven thousand dollars if you're under the age of fifty,
• 17:14
  Speaker 4: with a lifetime limit of thirty five thousand dollars. Now,
• 17:18
  Speaker 4: remember the beneficiary, not you, not you, maybe the account owner,
• 17:22
  Speaker 4: but whoever the beneficiary is, which could be. You must
• 17:26
  Speaker 4: have earned income to allow for the rollover up to
• 17:30
  Speaker 4: the limit, and you have to be eligible for that
• 17:32
  Speaker 4: as well. So contributions made within the last five years
• 17:36
  Speaker 4: aren't eligible for the rollover. Think of this as I've
• 17:39
  Speaker 4: had it open for fifteen years, but i only put
• 17:42
  Speaker 4: one dollar in for the first ten years, and now
• 17:44
  Speaker 4: in the last five years I've put in a bunch
• 17:45
  Speaker 4: of money. Well, contributions made within the last five years
• 17:49
  Speaker 4: to that five twenty nine plan are not eligible for
• 17:51
  Speaker 4: the rollover to the roth Ira And importantly, there are
• 17:54
  Speaker 4: no income limitations for that rollover. So normally, when you
• 17:59
  Speaker 4: have a roth Ira contribution, you have to meet certain
• 18:02
  Speaker 4: income limitations. If your incomes to how you're not eligible
• 18:05
  Speaker 4: for roth Ira contributions. In the case of the five
• 18:08
  Speaker 4: twenty nine to the roth Ira, the income limitations go away.
• 18:12
  Speaker 4: So here's what I'd say everybody, this stuff gets tricky.
• 18:17
  Speaker 4: Following the rules for an organization like ours quite simple, right.
• 18:22
  Speaker 4: We have checklists, we have flow charts that we go through.
• 18:25
  Speaker 4: We just make sure that you're going to do something
• 18:26
  Speaker 4: you're eligible for the average consumer. I mean, I maybe
• 18:32
  Speaker 4: you guys are a lot smarter than me, but it's
• 18:34
  Speaker 4: a lot. It's a lot to know the original law,
• 18:37
  Speaker 4: the migration of the laws, the new rules, and all
• 18:39
  Speaker 4: of that. So I would just encourage you does not
• 18:42
  Speaker 4: need to be Closs Financial, but I would just encourage
• 18:44
  Speaker 4: you get a really good CPA, a really good financial
• 18:47
  Speaker 4: advisor who helps you follow the rules. Because if you
• 18:51
  Speaker 4: follow them, it's great. You can within those rules, do
• 18:54
  Speaker 4: a lot, a lot, a lot of great things. But
• 18:56
  Speaker 4: if you suddenly step out of line because you're you're
• 18:58
  Speaker 4: thinking of an old rule instead of the new one,
• 19:01
  Speaker 4: it can be pretty painful.
• 19:02
  Speaker 1: That's a really good, really good advice, as always from CJ.
• 19:05
  Speaker 1: Closs and Eric Schwartz. They are our retirement planning professionals.
• 19:08
  Speaker 1: They come to us from Class Financial. The website Coss
• 19:10
  Speaker 1: Financial dot com. That's Class k l A A S
• 19:13
  Speaker 1: Financial dot com. Great website and resource. They're telephon number
• 19:16
  Speaker 1: six so eight four four two five six three seven.
• 19:19
  Speaker 1: No charge for the financial get to know you appointment
• 19:20
  Speaker 1: tech Loss Financial. It will be complimentary to you again.
• 19:23
  Speaker 1: Their number six oh eight four four two five six
• 19:26
  Speaker 1: three seven as fantastic and as amazing as five two
• 19:29
  Speaker 1: nine are. There are other options as well out there
• 19:32
  Speaker 1: that you can be thinking about when it comes to
• 19:34
  Speaker 1: helping your kiddo or grandkid with college expenses. We'll talk
• 19:37
  Speaker 1: with guys about that next as Money in Motion with
• 19:40
  Speaker 1: Class Financial continues right here on thirteen ten wib A
• 19:44
  Speaker 1: talking this morning with CJ. Closs and Eric Schwartz. They
• 19:47
  Speaker 1: are our retirement planning professionals from Class Financial website COSS
• 19:51
  Speaker 1: financial dot com. That's Coss k l a A S
• 19:54
  Speaker 1: Financial dot com. Great website. Their teleph number six O
• 19:56
  Speaker 1: eight four four two five six three seven. No charge
• 20:00
  Speaker 1: for that initial get to know you appointment tech costs financial.
• 20:02
  Speaker 1: It will be complimentary to you.
• 20:03
  Speaker 2: Again.
• 20:04
  Speaker 1: They're number six oh eight four four two five six
• 20:06
  Speaker 1: three seven. Talking about ways to help out your kid
• 20:10
  Speaker 1: or grandkid with college expenses. Talked about the five two nines,
• 20:14
  Speaker 1: five to nine plans, what a great tool they can be.
• 20:17
  Speaker 1: There's other things out there as well, and let's talk
• 20:20
  Speaker 1: about some of those those more creative ways, Eric, when
• 20:22
  Speaker 1: it comes to helping out those kids, whether you're a
• 20:25
  Speaker 1: grandparent or parent, helping them cover some of the costs
• 20:28
  Speaker 1: of college.
• 20:30
  Speaker 3: Yeah, like I said, earlier. Five twenty nine's are one
• 20:32
  Speaker 3: of the more common programs we see people using, so
• 20:35
  Speaker 3: we tend to talk about those a lot, but there
• 20:37
  Speaker 3: are a few other options worth considering.
• 20:40
  Speaker 4: One.
• 20:40
  Speaker 3: The first one I'm going to talk about here is
• 20:42
  Speaker 3: pretty simple. It's paying tuition directly to the school. So
• 20:46
  Speaker 3: this is as a parent or grandparent. It's a great
• 20:49
  Speaker 3: strategy because tuition payments made directly to a college are
• 20:53
  Speaker 3: actually not subject to gift tax rules. Now, this only
• 20:56
  Speaker 3: applies to tuition, so it doesn't count for room and
• 20:59
  Speaker 3: board or books or anything like that, but it is
• 21:02
  Speaker 3: a way to be able to give without having to
• 21:04
  Speaker 3: be cognizant of the amount that you are giving. The
• 21:08
  Speaker 3: second option for helping out here is helping on what
• 21:12
  Speaker 3: I would call on the back end here, so paying
• 21:14
  Speaker 3: off student loans after graduation. This won't affect the student's
• 21:19
  Speaker 3: financial aid eligibility, and your child or grandchild can deduct
• 21:23
  Speaker 3: up to twenty five hundred dollars of student loan interest
• 21:26
  Speaker 3: on their taxes. Now if you do, if you do
• 21:29
  Speaker 3: gift more than nineteen thousand a year or thirty eight
• 21:32
  Speaker 3: thousand for married couples, the excess may need to be
• 21:35
  Speaker 3: reported for gift tax purposes, So just two kind or
• 21:41
  Speaker 3: one important distinction between the two of those noticed in
• 21:44
  Speaker 3: the second one, where you're paying off student loans after graduation,
• 21:47
  Speaker 3: you do need to be cognizant of those gifting rules,
• 21:50
  Speaker 3: whereas paying tuition directly to the school does not actually
• 21:55
  Speaker 3: trigger those roles. And then the last one here I
• 21:59
  Speaker 3: want to talk about is is setting up a trust
• 22:01
  Speaker 3: to fund education. So this is definitely a more involved,
• 22:04
  Speaker 3: probably more expensive option, but it does give you a
• 22:07
  Speaker 3: lot more control, so you can specify how and when
• 22:10
  Speaker 3: the money is used, and it can be kind of
• 22:12
  Speaker 3: structured to align more with your values. Now, downsides, like
• 22:16
  Speaker 3: I said, legal fees to set it up and maintain
• 22:19
  Speaker 3: it can be high, and once you fund a trust,
• 22:22
  Speaker 3: the gift is typically irrevocable, so you can't just take
• 22:25
  Speaker 3: it back. But one advantage I would say for a
• 22:30
  Speaker 3: trust for education is it does have more flexibility in
• 22:33
  Speaker 3: terms of contribution amounts and what the funds are actually
• 22:39
  Speaker 3: used for in the end. So that's an option as well.
• 22:42
  Speaker 1: Great stuff this week, as always from our retirement planning
• 22:45
  Speaker 1: professional CJ. Closs and Eric Schwartz. Don't forget online class
• 22:49
  Speaker 1: Financial dot com tel for number six o eight four
• 22:51
  Speaker 1: four to two five six three seven. No charge for
• 22:54
  Speaker 1: that initial get to know your appointment at Class Financial
• 22:56
  Speaker 1: that is complimentary to you again their number six oh
• 22:58
  Speaker 1: eight four four to two five six three seven. So,
• 23:01
  Speaker 1: you know, kind of breaking it down to just the
• 23:03
  Speaker 1: core of it all is thoughtful planning and of course
• 23:06
  Speaker 1: making those making those efforts. Families they can really prepare
• 23:09
  Speaker 1: for these these rising educational costs, can't they?
• 23:12
  Speaker 4: Eric, Yeah, actually, I'm going to take this part at
• 23:16
  Speaker 4: the end part no worries, so absolutely, Sean, You're exactly right.
• 23:20
  Speaker 4: Every family is different and there's certainly no one size
• 23:23
  Speaker 4: fits all answers it relates to this, but by starting early,
• 23:26
  Speaker 4: working with a good financial advisor, you can create a
• 23:29
  Speaker 4: strategy that balances both your retirement goals with your desired
• 23:34
  Speaker 4: support for your children or grandchildren's education. And let me
• 23:37
  Speaker 4: just say, beyond what we have lined out here today,
• 23:40
  Speaker 4: whether you be the grandparent who said, oh, I'm not
• 23:43
  Speaker 4: having to balance, you know, between saving for retirement, I'm
• 23:47
  Speaker 4: just wanting to put some money aside, well that's that's
• 23:50
  Speaker 4: actually great. From the grandparents standpoint, it can be simpler.
• 23:53
  Speaker 4: Do I have money to save, I'm already retired. Where
• 23:56
  Speaker 4: do I put it? YadA YadA, from the standpoint of
• 23:59
  Speaker 4: the parent who trying to say for that child, significantly
• 24:03
  Speaker 4: more complicated. And it's the complication of what we just
• 24:06
  Speaker 4: talked about, the rising cost of education that often outstrips
• 24:09
  Speaker 4: your income earning. But then secondarily the how do you
• 24:13
  Speaker 4: even talk to your children about this? So I just
• 24:16
  Speaker 4: you know, Eric knows this, but I cannot stress enough
• 24:19
  Speaker 4: to you. Please get ahead of this. Don't don't do
• 24:25
  Speaker 4: the following. Don't say to your children, especially if you
• 24:28
  Speaker 4: can't afford to say this to your children. Hey, let's
• 24:31
  Speaker 4: just go visit some schools and you know, if you
• 24:33
  Speaker 4: can get it into a great school, like, we'll work
• 24:34
  Speaker 4: it out. Now. Some of you are going, ooh, that's
• 24:39
  Speaker 4: what I tell my children. That is so dangerous. The
• 24:43
  Speaker 4: reason it's dangerous is because the school they get into,
• 24:47
  Speaker 4: especially if this is not an in state school or
• 24:50
  Speaker 4: a school without reciprocity for the state of Wisconsin, you
• 24:53
  Speaker 4: could end up in a position where your child gets
• 24:55
  Speaker 4: into a school that costs sixty grand a year, and
• 24:59
  Speaker 4: for the average American family, they can't even get close
• 25:02
  Speaker 4: to covering that. Now, often we'll hear parents say, but
• 25:04
  Speaker 4: that's okay, you know, we'll just still get student loans.
• 25:07
  Speaker 4: Well two things. No, they won't for undergraduate education. It's
• 25:10
  Speaker 4: only about five six thousand dollars a year that actually
• 25:13
  Speaker 4: a student can get loans on the other ones are
• 25:16
  Speaker 4: known as parent plus loans. Those are loans that you
• 25:18
  Speaker 4: have to get. And so listen to everybody. Just cannot
• 25:22
  Speaker 4: suggest enough work with a good financial planner. They will
• 25:25
  Speaker 4: not only help you avoid those pitfalls of statements that
• 25:28
  Speaker 4: you can't basically follow up on with your children, but
• 25:31
  Speaker 4: then on top of that, they will help you find
• 25:34
  Speaker 4: the schools that still are great, that still do make
• 25:37
  Speaker 4: your children excited and happy, but that also meets a
• 25:41
  Speaker 4: budget that you can afford. So strong suggestion to everybody
• 25:44
  Speaker 4: find good advisors to help you manage the tension between
• 25:48
  Speaker 4: saving for your own future and helping your children choose
• 25:51
  Speaker 4: wisely for their college education.
• 25:53
  Speaker 1: I ask you a quick question, see jaysonce I've got
• 25:55
  Speaker 1: you and I get the opportunity to ask questions, are
• 25:57
  Speaker 1: there any if you have come across any employeers that
• 26:00
  Speaker 1: automatically allow or is it allowed to automatic with much
• 26:04
  Speaker 1: like your four oh one K into five two nine?
• 26:06
  Speaker 2: Is there anything like that out there love it.
• 26:09
  Speaker 4: Sean. As a matter of fact, if anybody who's living
• 26:12
  Speaker 4: here in the state of Wisconsin, you can go to
• 26:14
  Speaker 4: the ed Vest website and actually they have a whole
• 26:16
  Speaker 4: section for employer deduction. And now, interestingly enough, this is
• 26:21
  Speaker 4: not like a normal four to one K plan, where
• 26:24
  Speaker 4: the four one K plans are a little bit different
• 26:26
  Speaker 4: and unique. The employer has some responsibility for picking investments.
• 26:30
  Speaker 4: They're a co fiduciary of the plan, YadA, YadA. In
• 26:32
  Speaker 4: this particular case, it would just be more going to
• 26:35
  Speaker 4: the employer and saying, hey, it's almost like I have
• 26:36
  Speaker 4: another bank account. Hey, I have another account that I
• 26:39
  Speaker 4: just want you to dump money into out of my payroll.
• 26:42
  Speaker 4: Will you accept this kind of certificate to prove that
• 26:45
  Speaker 4: I have this account open for my child and just
• 26:47
  Speaker 4: dump fifty bucks a month into it. Many employers will
• 26:50
  Speaker 4: say sure. Now, I should say many employers with robust
• 26:54
  Speaker 4: accounting departments. So small employers will go, no, I don't
• 26:58
  Speaker 4: even know what you're talking about, but yes, it is
• 27:02
  Speaker 4: an option for your employer to just siphon off money
• 27:06
  Speaker 4: before you get paid. Now, just everybody knows the fact
• 27:09
  Speaker 4: that they're doing that, doesn't actually do that much for you,
• 27:11
  Speaker 4: it's still taxable income to you. You then have to
• 27:14
  Speaker 4: go notify your accountants. It's no different than you doing
• 27:17
  Speaker 4: the auto contribution out of your checking account. But if
• 27:20
  Speaker 4: you would prefer to have your employer do it and
• 27:21
  Speaker 4: they're willing to accommodate, great, So yeah, great question.
• 27:26
  Speaker 1: Sean much less likely to forget as well, which exactly
• 27:29
  Speaker 1: is exactly the best talk this morning with CJ. Closs
• 27:33
  Speaker 1: and Eric Schwartz. We always have a lot of fun
• 27:35
  Speaker 1: a lot of great information as well on the show.
• 27:37
  Speaker 1: Don't forget if you missed any part today's programmer, you
• 27:39
  Speaker 1: want to listen back to previous shows, you can subscribe
• 27:41
  Speaker 1: to the podcast right online at cossfinancial dot com. That's
• 27:44
  Speaker 1: Coss k l aas Financial dot com. Great website there again,
• 27:48
  Speaker 1: sign up for the weekly Market Pulse news letter letter.
• 27:50
  Speaker 1: Listen back to the podcast, gets into the team all
• 27:53
  Speaker 1: that much more. Coss Financial dot Com. They're telephone number
• 27:55
  Speaker 1: six o eight four four two five six three seven.
• 27:58
  Speaker 1: No charge for that initial get to know you appoyment
• 28:00
  Speaker 1: at Class Financial. It will be complimentary to you again
• 28:03
  Speaker 1: their number six oh eight four four two five six
• 28:05
  Speaker 1: three seven. Going to hold on to that telephon number
• 28:07
  Speaker 1: as well. Because it's time now for the class quiz question.
• 28:10
  Speaker 2: Of the week. We better have a winner this week.
• 28:12
  Speaker 1: This week's class quiz question of the week is this
• 28:14
  Speaker 1: true or false? Over the last thirty years, average tuition
• 28:19
  Speaker 1: and fees at public four year colleges have jumped one
• 28:23
  Speaker 1: hundred and twenty five percent after adjusting for inflation. Is
• 28:28
  Speaker 1: that true or is that false? Telephone number six oh
• 28:31
  Speaker 1: eight four four two five six three seven again, that's
• 28:34
  Speaker 1: Class Financial Office right here in Madison. First call with
• 28:36
  Speaker 1: correct ance'll win that twenty five dollars gift card to
• 28:38
  Speaker 1: Chewy again their number six oh eight four four two
• 28:41
  Speaker 1: five six three seven.
• 28:43
  Speaker 3: C J.
• 28:43
  Speaker 2: Eric.
• 28:44
  Speaker 1: It's always fun talking with both of you guys. Have
• 28:46
  Speaker 1: a great day. We'll do it all again real soon.
• 28:48
  Speaker 3: Thanks Sean, Thanks Sean.
• 28:49
  Speaker 2: News comes your way next right here thirteen ten w
• 28:52
  Speaker 2: Iby