The Safe College Plan(TM): Using FIAs to fund college expenses
By Roccy Defrancesco
The Wealth Preservation Institute
For parents or grandparents, there are few things in life more important than funding for a loved one's college education. So how do the vast majority of parents/grandparents fund for their loved one's college education? 529 college saving plans. Why? Because once money is invested, it is allowed to grow tax-free and can be removed tax-free for college funding.
But there's another tool, the Safe College Plan(TM) (SCP), for which you will never have to worry about funding your loved one's education only to watch that money evaporate when the stock market declines (like the 35 percent decline in the S&P 500 Index from 2000-2002 and a 46 percent decline from October 2007- October 2008).
So, the problem with 529 plans is that money invested in mutual funds inside these plans is 100 percent at risk to loss due to stock market downturns, thereby subjecting the invested money to the 46 percent and 35 percent declines listed above. However, the Safe College Plan(TM) also allows money to grow tax-free and can be removed tax-free for qualified college funding.
Unlike 529 plans, The Safe College Plan(TM) has the following characteristics:
1) Once funded, the invested money will never go backwards (100 percent principal protection)
2) Gains in an up-market environment are locked in and cannot be lost with market declines
Assume you have accumulated $200,000 in a 529 plan vs. The Safe College Plan(TM) by the time one of your loved ones turns 18 and goes to college.
If the child went to college just after the 2007-2008 stock market crash, how much would each plan have available?
- 529 Plan: $108,000
- The Safe College Plan(TM): $200,000
What if you had accumulated $50,000 in a 529 and The Safe College Plan(TM) by July 2000? How much would be available if you looked at the account values in July of 2008?
- 529 Plan: $41,942
- The Safe College Plan(TM): $70,289
Now, assume you invested $6,000 every July into a 529 plan and The Safe College Plan(TM) from 2000-2008. How much money would be available in each account to pay for college education?
- 529 Plan: $54,463
- The Safe College Plan(TM): $67,374
How can advisors start using the Safe College Plan?
First, you need to know the magic behind the plan and how it can use fixed-index in a tax-free college setting to pay for college funding -- and in a plan that avoids the 59.5 early withdrawal penalty when using FIAs for college planning. (Note: To receive a summary of how the SCP works from a technical standpoint, please contact this author using the forum below.)
A turnkey marketing package advisors can use has also been created. It comes with a brochure that you can put your own name and contact info into, a Web site, and a voiced-over educational PowerPoint presentation.
Is the SCP something you should be using to help your clients and grow your practice? What I can guarantee you is that the vast majority of current as well as future clients will have an interest and it's always a good idea to help clients protect their wealth when possible. The SCP is the only tool in the marketplace today that does so using FIAs, and if you have an interest, you should sign up for more information.
*If you would like to attend a free Webinar to learn more about how the SCP works and how you can use it to significantly ramp up your marketing for 2009, contact this author by leaving a comment and your e-mail address in the forum below.