IBC or 529?

...College Savings Food for Thought

What is a 529 College Savings Plan?

A 529 college savings plan is a tax-advantaged state-administered investment program that is authorized under Internal Revenue Code Section 529. These plans allow investors to save money in an account in which the earnings will grow free from federal income tax and, when used to pay for "qualified higher education expenses", may be withdrawn federal income tax-free. In many states, a participant can receive special state incentives, including state tax treatment that mirrors the federal tax treatment, tax deductions/credits and/or other state tax benefits, based on participation in their state’s program(s).
Earnings in a 529 plan grow tax-deferred and are free of federal income tax when used for qualified higher education expenses under Internal Revenue Code Section 529 (26 U.S.C. 529). Qualified higher education expenses include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance. Room and board expenses are also eligible for students enrolled half-time or more based on the current allowance for room and board determined by the eligible educational institution for federal financial aid purposes, or actual invoice amount charged by the institution to the beneficiary, if greater. In addition, qualified higher education expenses also include expenses of a special needs beneficiary that are necessary in connection with his or her enrollment or attendance at an eligible educational institution.

What are the tax benefits?

Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes.   Additionally, most states allow tax-deferred earnings and tax-free withdrawals for qualified higher education expenses, and some states allow families to deduct the full or a partial amount of their contribution from their state income taxes.

While many aspects of 529 plans sound very appealing to "the masses," how we think about what is going on here is vitally important.  Note that in the above descriptions I've highlighted each brief segment points us back to the idea that someone else (our government) is in control of the flow of our investment dollars going and coming.  This is really the fundamental difference between this seemingly benign savings plan and having true, 100%, control of your cash flow in every way including college savings.  If you were to engage the IBC teaching videos on this page you would receive a healthy quick education on how IBC promotes flexibility, versatility, and freedom.  If you read the above on 529 plans you have to ask yourself - am I getting those three values from this college savings option?

Further, once a 529 plan is exhausted of funds on use of school/educational purposes what do you really have to show for the savings (other than a diploma)?  With IBC as your college savings option, you not only have a safe cash growth environment, use of cash for anything in life including college, an ever increasing pool for wealth building beyond college and a financial tool for retirement and generational legacy.  All this happening with 100% access and no penalties to access funds. Finally, an IBC plan allows for you to apply for FAFSA funding while not being required to report your dollars on the form. Simply stated, IBC is truly a strong consideration for college funding and wealth building beyond college providing versatility, flexibility, and freedom.

  

Commenting on the Next Big Threat

...Student Loan Debt...

Bloomberg Business Week (BBW), January 20-26, 2014, page 10, nearly headliner article provides a painful assessment of what they (BBW) perceive as the next big threat to the U.S. economy - student loan debt.  The most intriguing part of the article highlights the numerous quotes and references to The Fed and in particular to the New York Fed and its president, William Dudley.  I say it's intriguing, because nearly the entire article is aimed at why the NY Fed and Fed in general, think that the rise in school loan default debt (90 day delinquencies up 11.8% in 2013 3rd quarter report) is so bad, but also how they are addressing "the fix."

If the BBW assessment is true that student loan default is the next home mortgage crisis, and all indications seem to point to this truth, then wouldn't it be prudent to talk just momentarily about preventative solutions for incurring such debt AND solutions for cleaning up such personal debt in loans by speaking to personal action rather than Fed judgments? 

First, to be fair to the article the chief economist of Wells Fargo, John Silvia, did assess that should loans be taken on by families and individuals it would be most helpful that people study what is most in line with their interests and maximum earning potential.  Well, how about that?  Great insight.  So, let's move on to a deeper solution.

Perhaps, parents and especially grandparents could begin a way of paying for school in the early stages of their child/grand child's life.  How? Via the Infinite Banking Concept and how Nelson Nash suggests in his book on page 83 of the Fifth Edition.  OR heavy school loans can be handled on the back end by, again, placing funds earned in an IBC plan thus paying off incurred debt.  This could be explored further by contacting me for a copy of Nelson's book.  In either case I want to make this clear point - leaving solutions in the hands of the Fed or anyone else, but you, and hoping for a magic bullet fix is not really how this great nation was founded.  It was founded not on government dependency, but on the ethic that families and individuals take on their own responsibility for their own actions.  Infinite Banking allows you and your family to do just that, and do it with enormous effectiveness.

Overwhelmed by College Costs?

Are you overwhelmed by College Costs?  The Infinite Banking Concept Can Help... Did you know that the Infinite Banking Concept resource can be a powerful tool  in the college planning process? Here's why. Although many scholarships reward merit, most financial aid is based on need.  To receive financial assistance, a family or student must complete the Free  Application for Federal Student Aid (FAFSA). Information on this application is  then analyzed using the federal methodology formula to determine what the  family is expected to contribute toward the student’s education. Money in  stocks, certificates of deposit and bank accounts are factored into this  formula, but your asset in the Infinite Banking System is not because it  is whole life insurance. Therefore, children whose parents have a portion of  their assets in a cash value life insurance policy may have a better chance  of qualifying for more financial aid than children whose parents have the same net worth and income who have not utilized the same planning technique. Just by reallocating your assets in a dividend paying whole life policy with a  mutual life company, you may improve the chances that your child could  become eligible for more scholarships and grants. College Planning and Whole Life Insurance The whole life insurance policy I help you implement can be a useful tool  in the college savings process because it:

•  Is not considered in federal financial aid calculations. •  Produces cash value, which can be accessed through tax-free loans or withdrawal/surrender of the paid-up additional insurance rider, to pay a  portion of college costs. If the policy-owner doesn’t use the cash value for  education funding, it can be used later to supplement retirement, or for  any other purpose.  • Offers a guaranteed death benefit, which can be used to pay college costs  if the insured dies prematurely. With college costs expected to increase at an annual rate of 5 to 10 percent*  for the foreseeable future, the ongoing uncertainty in the economy and  interest rates at record lows, planning for college is a major challenge for  many parents. Contact me at 816-588-2328 for more information on how  The Infinite Banking Concept can actually improve your ability to pay for  college expenses while limiting college loan expenses. *The American College, 2011.                                             For more information send inquiry to: mzimmeribc@gmail.com

Financing College

From the Driver's Seat...

In less than one year my wife and I will begin to finance our daughter's college education largely (if not in total) through the wonderful resource of infinite banking. Back in 2008 I, like you, were awakened to some pretty harsh financial realities in the public marketplace, but also in my own personal financial situation.  I knew that in five to six years I NEEDED a better option to be able to finance my child's future education than "a wing and a prayer" and FannieMae.  Ugghhh, that was such a hard thought to ponder.

At the time I also had many other things spinning like high unsecured debt, pitiful pension, and minimal death benefits in case I passed on.  In short, my family was in high debt, little retirement funding, and unprotected in case of my demise!  NOT good. In addition, I had no way to pay for college.  Up a creek without a paddle.

I won't address how Infinite Banking helps with the first three issues,  but I will say today that 2008 was the (sounds odd) perfect time to begin a dividend paying whole life insurance policy that was set up for us to quickly begin utilizing for the banking benefits.  November 2013 marks our 5th year as Infinite Banking practitioners and I'm super excited to say we're debt free (except mortgage), I have an ever increasing passive income pool for "retirement" (that I can tap tax free), I have an ever increasing death benefit to leave a super awesome legacy, and I have placed my money in a system that is 100% liquid with no taxation on growth and can use it anytime I need it for any reason I desire - INCLUDING financing my kids college.

I'm not an official financial adviser, I'm a guy who lives and teaches Infinite Banking, but I would say that being in the financial driver's seat right now in regards to financing college in the years ahead feels so much better than keeping my money stashed away in some government qualified plan hoping it will grow and for the most part unable to access its use without penalties. So, what to do?  Well, if you have a seventh or eighth grader and you're thinking college and how to finance - you might consider Infinite Banking.  It's meant more to me than what I thought I knew. Call me if you'd like to explore how you can set up your own Infinite Banking system.

Post High School Education Reality

Am I ready for this?...

Last night I went to my daughter's high school and sat in a fast paced one-hour presentation on the many ways I and my daughter should be preparing for post-high school education.  I left feeling like I had been sacked by Ray Lewis - multiple times!  Don't get me wrong - the information was solid, well presented, concise and all that jazz, but it was a heavy thought as a dad to consider that between now and next August I am on the fast track to a big-time transition with my girl, not to mention she has a sister who is a junior!

[DEEP BREATH]

So, between meetings like the one I attended, scoping out the FAFSA site for help, the high school website for help, the college of her choice website, meeting ACT testing deadlines, senior pictures, senior year this-that-and the other, I am overwhelmed.  Are you there?  Have you been there?

[DEEP BREATH]

Well, today I am concluding that the money part (you know, financing the college tuition) should be OK.  I am believing that our Infinite Banking system will be a TREMENDOUS asset in paying down and paying off college expenses (while foregoing interest to others). If you would have asked me five or ten years ago how I was going to pay for my child's college expenses - I would have answered "a wing and a prayer."  So, glad that what I thought I knew in this realm, just ain't so!

Infinite Banking and College planning go hand in hand.  I'm thinking if you have a seventh or eighth grader you should contact me now on how you can begin to prepare your child for college financially and pass up the traditional financing options.