Ep. 32 – Washington 529 College Savings Plan – Post Coronavirus – What’s New, What’s The Same
Washington 529 College Savings Plans update…Springtime seems to mean getting back together with Luke Minor and Jackie Ferrado from the Washington 529 College Savings Plans. I’ve checked in on the Washington 529 College Savings Plans for the last two years as my own oldest kid was nearing his freshman year of college. Here are the first two podcast interviews with them. It is time to check in again with them.
To watch video interview on YouTube.
Washington 529 College Savings Plans include two plans, the GET Guaranteed Education Tuition 529 Prepaid Tuition Program and the DreamAhead College Investment Plan which provide families with two powerful tools to save toward college goals. You can start here for info on both plans.
We did this interview in the early days of the Coronavirus pandemic in the Spring of 2020. We talk about some of the effects of the recent situation.
Colleges have closed, students have been sent home, families have had refunds to some extent. We talk about the impact of refunds, what is new with college savings plans, and what has stayed the same.
As always, tune in to hear all the details.
In this episode you’ll learn more about:
- What are the key things families should know right now about the two Washington 529 College Savings Plan?
- What are some of the questions people are asking when they call Washington 529 College Savings Plan call center?
- How are people reacting to the March drawdown in the markets?
- The GET is a prepaid college savings plan guaranteed to pay future tuition. How solvent it is?
- What to be thinking about if you are a current plan participant, especially if you have lost a job
- What to be thinking about if you want to start saving for college.
- Why saving is more important now than ever.
- Washington 529 College Savings Plan main website and Facebook.
- Watch this podcast on my YouTube channel The Financial Side of Life.
- If you are looking for a financial advisor to help you earn more, save more, invest more so you can do more, reach out to Angie today.
Have a question about Washington 529 College Savings Plans that you’d like to have answered on a future podcast episode? Send your question — along with your name and the city you live in — to firstname.lastname@example.org.
Full pocast episode transcript.[00:00:00] Hey everybody. It’s Angie here and I want to welcome you to the Financial Side of Life podcast. Today I am joined by Luke Miner, who is the Director of College Savings Plan as well as Jackie Ferrado, Community Relations Manager and they are both affiliated with GET and DreamAhead programs here in Washington state, the Washington 529 College Savings Plan. [00:00:27] So I’d like to welcome Luke and Jackie to the program. Welcome you guys. Good to see you again. [00:00:32]Jackie: [00:00:32] Hi. Yeah, good to see you. [00:00:35] Angie: [00:00:35] Well, we have talked a couple times now, is this our third time to actually do a podcast, I think, right? Yeah. Yeah. And it almost seems like we’ve done it about this time of year, so it’s good to be back. [00:00:50] And my goal for today was to kind of catch up and hear what’s new, what’s not new, . what’s changed, what’s stayed the same? So [00:01:00] we’ve kind of worked up some questions to go over today. and I want to remind listeners too, that this is not only a, an audio podcast, but you can watch this interview as well on my YouTube channel, which is financial side of life, or Angie Furubotten-LaRosee on YouTube. [00:01:15] Okay. So I asked if we could just start by doing a short kind of quick overview of what a Washington 529 College Savings Plan is. [00:01:27] Jackie: [00:01:27] Okay, I’ll take that one. So 529 plans are taxed advantaged college savings plans, and there are two types. Prepaid tuition plans and traditional savings plans. [00:01:39] Every state in the country, sponsors of 529 plan either having a prepaid or a savings or even both. So Washington state has both types of 529 plans, which is the get program and the DreamAhead investment plan. So the unique things are the cool things about Washington 529 College Savings Plan is that the earnings [00:02:00] grow tax free. [00:02:01] And then they remain tax-free when it’s used for qualified educational expenses. Now, one of the best pieces of advice or tips we can give people too, is not to presume the kids can’t go to places outside of the state they’re in because they actually can attend colleges, universities, nationwide and abroad. [00:02:21] They can, even with the recent law that was passed in December, They can snail start using it at apprenticeship programs. So. That opened up and then anyone can contribute to a 529 plan. So it’s a really great way for parents and grandparents and friends and family to help, gift, the college education or their future education. [00:02:43] A child’s future education and account owners can also transfer money between kids. So those are the unique features and the really wonderful things about 529 plans that make them a good foundation for getting some future expenses. I saved up [00:03:00] for while the kids were little. Yes. And. And I’m, I’m going to add to that, you’re starting to do webinars or are they live events or, or recorded events? [00:03:13] Well, we are doing live and they are recorded, so if people have to come and kind of come and go through them, they can always catch up a little bit later. But we’re also doing a new thing that I’m really excited about and it’s called the wa 529 knowledge cafe. And it’s an online meeting place and we’re using zoom. [00:03:32] As a way to do that. Our calendar of events page,, on the websites. Actually, we’ll give people dates and times that we’re doing it and we wanted it to be really flexible, so people at any time of the day at different times, and that we could cop in. Get some information and ask the questions without feeling like, you know, like they could only do it at one time of the day, or you know, Oh my gosh, I’m working till five and I’m not going to get, you know, get around [00:04:00] to doing that. [00:04:00] So event calendar page has that. We’re really excited about being able to interact with people through that feature. And the event calendar page is on the main. Yeah. So from the main page of the websites, it’ll, there’ll be a webinar link. And so we’ve listed in under the webinar link, and there’s a calendar, has the dates and times that we’re doing things. [00:04:23] The knowledge cafe will require registration, so people could just click in and, and, and join us. The webinars do have a registration piece to it, so, sure. Okay. Yeah. And I’ll post links. I sometimes I edit in the actual link while we’re talking over, you know, over the image hair. So, do you happen to know w a website to go to so we can speak that. [00:04:47] Yup. It’s wastate529.WA.gov/contact and, that one gets them to the main WA 529 website and when [00:05:00] they go to the contact and that the calendar shows up. And the webinars. Yes. All that information. Okay, good. I’ll, I’ll link to that and I’ll put that on here too. You put this information out on Facebook too, right? [00:05:11] Oh, we did. Yeah. We put it out on Facebook and through different partners that we have to in different communities that we’re always in relationships with, like our employer base. There’s a lot of people working from home, as you know nowadays. So there is a lot of opportunity for employees to do what, you know, a typical lunch and learn type of thing. [00:05:32] So we’re starting to implement those kinds of opportunities at any time of the day, which is why we call it a knowledge cafe instead of a lunch and learn. Yeah. Perfect. Okay. Excellent. , and so my point with having you talk about these events that are coming up is that if people need to know more about the background, what is a 529 and Washington 529 College Savings Plan. [00:05:50] What are some of the differences between the get the guaranteed education tuition program and the DreamAhead program? We don’t have time here to talk about that. That’s not really the [00:06:00] focus of our talk today, but they can attend some of your events and they can go to the website and learn more there. [00:06:06] Yes, please. Please do. I agree. Please do. [00:06:11] Okay, so I wanted to start off by, you know, asking what’s new, and so I’m just trying to get, you know, the heart of. You know, a couple of things. What are you hearing our, our, you know, are parents’ families calling in with kind of the same questions over and over again. [00:06:26] Angie: [00:06:26] So what are you hearing? And then what are things, what are, I would say the key things that families should know about either the GET or the DreamAhead both a part of Washington 529 College Savings Plan right now. All right. Well, I’ll go ahead and take the first part of that question. So what’s new? , but the question could be, what isn’t new, right? I mean, we’re all in this new world together, of what it’s like to go through a pandemic. [00:06:47] Luke: [00:06:47] And, you know, to be perfectly honest, we actually have seen a decreased volumes to our contact center. , but what that’s meant is that. Customers are having a lot to [00:07:00] consider. Right. , just to, with every other industry there, there is a bit of a slow down in, as far as people just trying to sort out their everyday lives. [00:07:06] But we’re trying to do is we’re working remotely, as Jackie mentioned, a lot of people are. We’re no exception, including our. our entire team is offsite, but we’re still serving customers. And what we want to be is being there for them to address any questions they have. And I think Jackie has some good insights into what kinds of things we’re hearing from customers, but just being on hand and removing one more layer of things for people to worry about by being on call and available for that. [00:07:31]but obviously we are seeing, colleges, do very unprecedented things such as. You know, taking instruction completely remote. And so that is having impacts on our plan participants in college, students in general as far as what does that mean for the rest of their spring, quarter or semester? What does it mean for the fall? [00:07:51] And how does that impact their need to access their funds or funds they may have already distributed that they’re now potentially getting refunded from institutions. and so we’ve been [00:08:00] fielding inquiries around that. And there are some things, some developments that I, know. you’re aware of as well. Being put into place to, to help people through that. So I think the, the theme that I’ve seen is just a lot of people working together to solve complex issues and we don’t know what all those issues that are going to come up, with our programs or with anything else and family’s financial situation. [00:08:22]but, but we’re here to help. So, our industry, we’re part of, the college savings plans network, not just the Washington 529 College Savings Plan. So we’re talking nationally about different considerations, the themes we’re hearing, whether or not there’s a, you know, a lot of panic among investors in the plans, like DeamAhead that are tied to the stock market. [00:08:39] And we’ve seen the economic volatility happening. And, you know, in short, we just have not seen a lot of people making really, Aggressive moves within their savings. They seem to be, for the most part, holding the line, waiting to see what is going to play out. And to be honest, that’s good for us to see because as we know, these are intended to be longterm savings instruments [00:09:00] and they’re going to be ups and downs in the market. [00:09:01] However, we know this is a very unprecedented times and we don’t know where it’s going to lead so. It is meant to be spent to, you know, within like I’m spending for my accounts right now. And so that, that long timeframe comes to an end at some point. And I, I wonder if people have been caught off guard because we’ve just been on this, this joy ride for a decade in some regards, especially on the, not on the get side of things necessarily, but on the DreamAhead. [00:09:29] Or uninvested type programs. Cause we got lulled into this sense of everything’s going to be great forever. Kind of a feeling. I think I kind of wonder if parents were caught off guard perhaps over, over allocated and maybe, hopefully they’re not overreacting or making dramatic changes all at once. [00:09:47] But, are you able to speak to what you’re seeing? Are people kinda sticking, like you said, it sounds like people are sticking with their plan. Yeah. They cover a couple more things there. And then I think Jackie had some really good [00:10:00] insights after talking with our contact center and just, we’ve all been in close conversation in the recent weeks. [00:10:06] But, in general, say, taking DreamAhead, for example, I think we’ve seen about, we have about 800 million, in assets under management, and about 8 million of those dollars have retreated to more conservative on. So 8 million out of 800 million as a relatively small amount. So we have seen some movement, in people to some relative, just some more conservative options, but it’s not an overwhelming number of people. [00:10:30] And we’re digging a little deeper to see maybe where people are on their usage continuum, right? If they’re the people making the movements are for the older college students. We’re not, we, we don’t have that available right now, but the trend we’re seeing is, and again, as evidenced by we’re not getting a lot of panics collards to our contact centers, you know, again, there’s a lot of other things people are thinking about. [00:10:53] There may be top of mind right now, but it is reassuring to hear that, that perhaps people, you know, again, [00:11:00] are, especially those with younger kids are really thinking about the longterm picture in not. Waiting to do, you know, not reacting right away. And we always encourage customers if they have questions about what they should do is always encourage them to speak with financial advisor such as yourself, so that they can make an informed decision. [00:11:19] But Jackie, I think you had some other things you’ve been hearing about specific topics that people are bringing up in questions they have. Yeah. I think what’s, what I’m really excited about is that even through all of this, that people are still in rolling. You know, there’s still this, especially with the younger, the child is, it’s almost like in some ways it kind of ignited. [00:11:40] The situation we’re in is kind of ignited people to go, you know, I really shouldn’t just sit around and wait for this. So we’re getting, you know, still enrollment questions and people enrolling. In fact, a webinar I did on Tuesday. Had, almost about 70 registered participants, you know, just to get [00:12:00] the information. [00:12:00] And that was really exciting to have that many people, you know, sit in on, you know, one period of time to do that and to learn a little bit more. Or we had a good sense of the kinds of questions that people were asking, which were the typical ones that, you know, often get people wondering. Not so much about whether I should do this or not, but, just to be sure, you know, like people want to know what is my worst case scenario if this happens, what, you know, what, what will it look like in the future? [00:12:28] And so that’s, you know, we were answering those kinds of questions and continued to, whether we were in this situation or not. It was just now people are going, Oh, this may, this makes a lot of sense. I think the other part of what. People who are either using their money now. Yeah. Like their kids just started college this past academic year, right. [00:12:51] They got only so far, you know, it almost into spring and now you know, there’s this whole new world that we’re all living in, so there, and not [00:13:00] necessarily are they calling and asking about. Using their, their money in their accounts because they want to eat, you know, like make different decisions. Like, Oh, we’re going to take it out or we’re not going to do this anymore. [00:13:11] It’s more like, just being prepared. Like in this scenario, what would I do where, you know, just knowing that we can transfer it from student to student, we don’t have to use it right away. you know, there’s the re contribution, options that local. Talk about to that, you know, and those are all, what is. [00:13:30] That people just need to know to be more prepared. But like Luke said, they’re not necessarily making these decisions. You know, like random decisions like, Oh my gosh, you know, the sky is falling. I’m gonna stop, pull my money out, kind of thing. But they’re just being a little bit more cautious. Are there questions coming in about, especially with get about solvency, or are there questions or people, and maybe you could just speak to it even if it doesn’t seem to be top of mind because there’s a guarantee [00:14:00] there that. [00:14:01] Is based upon having, you know, money in the accounts to pay out to future, to, you know, future kids going on into college. So, right. Yeah. And as we know, get is a very unique instrument in the 529 world. It’s prepaid tuition plan, meaning there is a guarantee of some and quantity of something at the end. [00:14:20] So it works more like an insurance product. So from customers, we haven’t been hearing a lot of questions around the longterm solvency of the program. However. People who have been following the program for a long period of time and kind of understand the nuance with running a program like this and saw the impacts of the great recession have been asking that. [00:14:37] You know, we were on a KIRO with, with Jesse Jones a couple of weeks ago. He approached us wanting to know. that very question. And you know, the message right there is the get has weathered a lot of economic uncertainty over the years. And there have been a lot of conversations about the longterm solvency of the Washington 529 College Savings Plan. [00:14:55] And, and get was at a point where it was 79% funded back in, [00:15:00] 2010, kind of the low point of the funded status following the recession. Yeah. And there was a lot of conversation and concern at the time about our ability to meet all of our future obligations without the state needing to step in and back the guarantee. [00:15:12] But that’s a really important point for a plan participant to think about with a program like yet is there is a contractual guarantee from the state and it’s a codified, the state law. That if we’re ever had a shortfall on the funding of the program, if we became insolvent, the state would have to step in and cover that guarantee. [00:15:31] However, we work as hard as possible to make sure that that’s never going to be a possibility. We want to responsibly manage the fund by being wise with the investments that we’re making via the state investment board. and then also just closely, appropriately priced in the unit, Sarah, fair price to customers. [00:15:47] And so that, we’re collecting enough to be able to, again, back up, whether the economic ups and downs and then ultimately meet our end end obligations to participants. So, [00:16:00] and where we’re at right now is, so I was talking about point where you’re just under 80% funded. Within a three year timeframe. [00:16:06] We were already back over a hundred percent funded. So there has been, I think, six different years in the programs, 20 year history where we’ve been under a hundred percent funded. But there’s been many more years where we’ve been over a hundred percent funded, and that’s just a reminder that that measurement’s a point in time measurement. [00:16:21] It’s very sensitive to short term changes in. You know, financial markets, tuition growth, assumptions get is very dependent on what tuition does in our state. that’s the biggest, that’s an even bigger impact on the funded status, than, than financial. So, but you often see an inverse relationship, right? [00:16:41] When stock markets are declining, the economy is struggling, state budgets are getting strained. You tend to see a trend towards higher tuition increases, which does put a strain on the fund, but the legislature has just renewed their commitment to affordable. Higher ed tuition in recent years by lowering tuition [00:17:00] and putting it on a slower growth curve. [00:17:01] So I don’t, I haven’t heard conversations with anyone being anxious to rapidly increased tuition to make up potential revenue shortfalls yet, but we’re certainly keeping a really close eye on things gets 130% funded now, which you know, is very, very well funded for a defined benefit program like this. [00:17:20] Our Target’s 115. We always. Ideally you want to be at 115 or above for maximum solvency. but really 100% is what we’re looking for over the long term. Okay. That’s good to know. Good to hear. Okay. And, so I’ve got some questions too, about things like. You know, on the refund discussion. And you know, this is actually my own family situation. [00:17:46] We made our decision already, but I’m guessing there’s other families who are in the same scenario or same situation. We’ve got a first year freshmen started last fall. we. Paid for first semester, I [00:18:00] think it was. And then we paid for second semester, everything, housing, room and board, all of it. [00:18:05] Tuition, room and board in January. And so the choice came to my son, you know, do you want to have a refund of some kind or do you want to just push this on into the fall? And so we just put for our family, we pushed it on, but I’m guessing there’s some families who. Had a refund. And so I guess my question is, what should we know about that option? [00:18:29] Yeah. I feel pretty good with pushing it out to two till the fall term. You know. It’s just going to be spent then. Right? But if we wanted to take the refund, what should we know? Are there any gotchas? What can you tell us about that? You have a great thing about that is, is that was something that’s recently been enacted for 529 plans. [00:18:48] It’s actually been a guest in effect for several years now, since 2015 is that you can re contribute refunds. that you get from an institution to your 529 plan. So if you took a qualified distribution for, say, housing expenses that [00:19:00] later get refunded, you do have the ability to take that refund within 60 days and put it into a 529 plan. [00:19:05]one of the measures that’s been taken since the cares act passed the COBIT, relief, effort package is that deadline has been extended for people who took, who otherwise would have had to contribute that money by April 1st. So they took, got their refund after February 1st. From an institution, they now have through July 15th to re contribute that money to a 529 plan without penalty. [00:19:29] And so the way we’re telling people, just so it’s simple, anyone who’s gotten a refund in the last, couple of weeks, or we’ll be getting one in the coming months is remember it’s always 60 days or in this temporary period of time, it’s the later of July 15th or 60 days. Got it. So a lot like the tax dates have been extended and you know, RMDs are waived. [00:19:53] They’re making all these concessions to help people out. So I think they selected the July 15th as convenience [00:20:00] to align with all those other, other provisions as well. And I think, you know, as far as what to do with that expense, I think that’s a great discussion for someone to have with someone like you about. [00:20:09] You know, you don’t know maybe what the future plans will be for college. If you’re pretty sure you’re going back to the same institution in the fall and and don’t have much concern there, it may be best just to leave the money in there and not have the headache of getting it back. We do try to make it easy for people to get their contributions back, just have to keep records of it and everything. [00:20:27] But for someone who may be unsure about what their plans are next fall, it could be worth thinking back into 529 . But certainly it’d be good to have conversation with someone like you. If they’re uncertain about that. Sure. Okay. Yeah. I mean, my kids definitely going back and I just kind of wonder, what does that look like though? [00:20:46] I mean, we can’t even really predict what are, are they going to allow them to come back? I guess that’s my question, and. And regardless that they may not need the room and board part of it, but tuition will still need to be spent because they’re still gonna have [00:21:00] school. So I still see that money being spent. [00:21:04] No problem. Okay. yes. That’s good to know. So that got extended. How about families who already have get accounts already? Is there anything that should be top of mind to them right now? Not necessarily for new families, but families with get accounts already. Anything they should know. Yeah. I think the first thing is to think positively, you know, continue if they can, as best they can, if possible. [00:21:33] Just keep on saving, you know, maintaining their accounts as is still, you know, a good place to go. But certainly, you know, their day to day and expenses and needs are more, are a priority. So we, you know, in terms of the GET program, we’ve always had. opportunities and for families if they need to make changes to their account. [00:21:56] Like if they had a custom monthly plan where they were making a regular [00:22:00] monthly payment, and if something was changing in their scenario and they wanted to make some changes to it and reduce it, or, add more that they would. We always said to them, give us a call. You know, our contact center team, are able to take a look at their accounts specifically and then present them with some options that they then would. [00:22:21] And we, again, always encourage them, always talk with your financial planner, your financial advisor, you know, to see how they line up with other things that they may be doing and to be, you know, just really cautious before they make major decisions. So that when they, they know what they’re doing and what the outcome is. [00:22:37] With that, but we’ve seen, An increase in people asking that question, not necessarily facilitating the action, but asking the question, I’ve got a monthly plan. I might want to reduce my units because my husband has been, you know. Temporarily laid off or he’s unable to go to work or something like that. [00:22:58] Right. And [00:23:00] so our contact center team, in fact, they, our contact center manager has, is doing two live webinars where she’s helping to answer the questions about what kinds of changes could people typically make and what action happens when they decide to make it and what things they should be considering when they’re going to make a change, whether it’s [00:23:20] To reduce the number of units they’re having so that they can reduce their monthly payment or to convert it. Maybe they want to eliminate the monthly payment altogether. Our biggest encouragement is for people to, to kind of take a pause though and continue to think of ways, if that, if it’s possible to continue maintaining their accounts, but just certainly give us a call so that we can help them. [00:23:44]with the kinds of options that are available to them. And then they would talk with their financial advisor to make sure that they line up with other things that they’re doing and that they’re just not suddenly going, Oh, let’s just take our money back. And then there’s, you know, IRS taxes and penalties. [00:23:58] There’s been no, [00:24:00] federal guidance at all about what, you know, the IRS penalties and fees. And so, you know, that would be something that they would want to just, you know. Pause on, not, not get too too, overly concerned about doing anything immediately. But, you know, we’re all in the, in different scenarios and we really always just want people to be encouraged to. [00:24:23] Save what you can, you know, every little bit means the kids borrow less or the students borrow less than the future. And so maintaining what they’re doing is going to be very helpful. But our, our teams in both, contact centers get and DreamAhead, are very well versed in helping people understand, you know, what product they have or what type of account that they have and what options are available to them for that. [00:24:46] And then encourage people, talk with your financial advisor to make sure that it lines up with the other things that you’re doing. And. Situations that you want to be aware of before you do them. Okay. And so would there be any specific, things [00:25:00] people with DreamAhead accounts should be considering at this time in addition to what you’ve already talked about? [00:25:06] Yeah. You want to take that one. Sure. I would say that again. you know, Jackie referenced speaking with a financial advisor. I think when you’re talking about an investment product like that, if you do have access to a financial planner or financial advisor, that would be a helpful conversation to have a reminder that we’re a Drexel plan, so we can’t provide financial advice to, to our customers as far as what they should or shouldn’t do. [00:25:28] But we certainly can generally say. You know, these are long term savings products, right? And, and if you try to time the market with, you know, moving your money around that, that can be, that can create a headache for you. And so the best thing you can do is stay the course and keep up your contributions over time. [00:25:47]but again, we can’t give that specific guidance as far as what someone should do right now. And I think it certainly changes depending on where someone’s at in their. During usage cycle, right? If they’re, if it’s a graduating high school senior about ready to go to colleges and [00:26:00] family may have a very different decision point to make in moving assets potentially between portfolios or making an early withdrawal versus someone who has a younger, a younger beneficiary. [00:26:13] And so one of my questions that we talked about earlier, but I think you already kind of touched on this, Jackie, is that what if a family has faced a job loss? So kind of speaking again specifically to that situation, what might, what might they consider. So regarding GAD, if they have a monthly plan where they’re, they’re doing that routinely, specifically paying this monthly payment, and somebody in the family has lost their job, some things that they could be doing is a temporary pause. [00:26:43] You know, like they just wouldn’t be making that monthly payment for a short period of time. And then the, account would be, A PR paused for it won’t be getting any late fees because of the payment being late, and then the [00:27:00] after the person can pick back up again. They would just start to pick back up and get that caught up and always making sure that they’re communicating with our context. [00:27:08] Center team to make sure that the, you know, there is a plan for how they’re going to get caught up because the delay in making the payment means there’s going to be a delay in using the money or accessing the money later. So the point there, or the purpose there is to help somebody not get so far behind in it that they can’t then, you know, conceivably figure out how to keep that plan as it is. [00:27:33] But there are other options for. Like reducing the number of units maybe they were starting with, so if they had a contract for 400 units, but they, that monthly payment is just on the, or, they’re unable to make that one because of a situation, we could reduce it down to 300 or 200 or 100 and it’s always going to be their input. [00:27:55] You know, they’re going to see the results of that distance. Vision, both in what the payment [00:28:00] looks like and what the, what, what that means they’re going to have when the kids are ready for college. So it helps them to figure out, you know, one where is my comfort level, but what is my priority? You know? [00:28:11] And that’s not unusual to, you know, that’s always been in place. We’ve seen people making those kinds of decisions in us putting temporary pauses on accounts. So people can take some time to get caught up. You know, our Washington 529 College Savings Plan programs are here to serve families. We’re here to help families save money. And so every effort is put into helping them see what the options are or what the possibilities are, and then help them to maneuver through the information. [00:28:38] And again, I know we keep beating this like a dead horse, but it’s so, so important. We tell people all the time, please, please, please, always make sure that you’re talking with your financial advisor or. Financial plans. Somebody who has got that awareness of what your other investments or saving strategies are so that you’re not lost and you know the differences between [00:29:00] the types that they may be doing because you all can help them with that. [00:29:05] And including how their 529 plans that into those pictures. Right? So you get point, you know, cause they might, they might have a couple of different buckets of money that are earmarked for college, and this is just one. And so it does, it does play a role into the, the greater picture of the plan. So. [00:29:23] Right. the pause feature, is that a, is that a. Formal thing. Do I have to call up and say, I’d like to pause for two months? It is. Okay. They do. Yeah. They do have to do that. We am, you know, it’s always a better account. Security, you know, we don’t take instruction from just anybody about an account. So the account owner would be the one who gives, you know, gives the call in and our contact center staff has a. [00:29:46] You know, a manner of asking clarifying questions to be sure they know who they’re talking to, and then they can put a temporary pause. And then there is a, you know, a strong expectation that that account owner is going to stay in [00:30:00] communication. You know, because the one thing we can’t do with as many accounts as we have is, you know, we don’t go back through and go, Whoa, I wonder if we. [00:30:07] Caught up with that other person. So, you know, just like any other bill, once that pause is lifted, you know, the system picks up, Oh, it’s late, it’s gonna send a late fee. So we’re always trying to make sure that people take ownership and accountability for the process of, of helping them stay on, on point, you know, on target with what they’re doing. [00:30:28] And you know, there’s also the conversion. So some people might have a monthly plan and they’re. Ping, ping, ping, and then some situation. And it can be a PI, another situation where they now have a windfall of money in there, you know, don’t need to bank monthly payments anymore. So different scenarios will be different conversations. [00:30:46] There isn’t one way. And the only way, you know. And so, yeah, the conversion itself means that they could change from having a monthly plan to having the lump sum. We’re talking about a get account, which means that they’re not [00:31:00] required to make any monthly payments. And then depending on their actual account itself, it might mean that they have more units than they were contracting for, or they, you know, the reducing. [00:31:13]units or lengthening terms might mean that they’re paid in full. You know, there are many different, you wants is depending on the person’s account and their payment schedule and all that. So, and that’s in fact the webinar that’s on April 29th, and I should say that one is full to capacity. So we have another one on may six where our contact center manager will be going through all of that, which is. [00:31:39] And it’d be really helpful for people right now just to know what can I do? yeah, that’s great that you’re doing those cause that’s kinda new for you and obviously the demand is there, right? Yeah. I think good turnout. So, sorry if I jump in here really quick. I do want to make sure we circle back to something that I think was brought up, but I think you may have [00:32:00] been kind of alluding to it in your question with the losing job, you know, is there is this question, should someone’s half into. [00:32:08] They’re, they’re savings. They’ve already accumulated, not only managing, you know, what they may have had set up for monthly contributions, but should they actually, if they need to tap into a source of additional income, is it advisable to do that in a 529 plan? And, you know, just with it as with a dedicated retirement account, it’s always best. [00:32:26] That if at all possible, dedicated to what you’re saving for because you have tax deferred growth and it remains tax free if you use it for qualified education expenses. If you don’t, then you do have IRS penalties, a 10% penalty on the earnings plus income tax on the money you withdraw. So you lose that tax benefit. [00:32:43] And as of right now, we’re not aware of any federal level efforts to ease that right now. Like they’ve done retirement plans. So, so it’s again, one of those things, if push comes to shove, people may be forced to make a challenging decision, but we certainly, whenever [00:33:00] possible, would recommend that people. [00:33:02]but again, talk to financial professional, but, but more than anything, if you can leave that, that savings stream dedicated to the intended purpose, that’s always preferable. But everyone’s going to have a different thing to consider. So we just want to make sure that people are aware that as of right now, the IRS is not waiving penalties or fees on. [00:33:21] Paid distributions. It doesn’t mean it couldn’t come in the future, but that’s not something we can count on right now. Right. Okay. That’s good to know. I, and I did want to ask that. I was curious about that as well. a couple of things happened prior to this whole current Corona virus thing, and there was the secure act back in December, 2019 and that, impacted a couple of things with the college plans. [00:33:43] You talked a little bit about it, I think, Jackie earlier, but, A couple of things come to mind. Would you mind just talking to that a little bit, how that impacted the 529 plans? Yeah, I can jump in and cover that. So, you know, at the end of end of the year, last year, there was the big omnibus bill package that [00:34:00] got passed and some things that had kind of been in the hopper for a while in the kind of policy stream and fuel for 529 plans. [00:34:07] That expand the benefits, the qualified expenses. those, there were two key provisions that went into effect that actually there was some, some weird, language. I think they didn’t clean up the language in the end, and it actually interestingly made it retroactive so people. I this very short window of time at the end of 2019 to get in requests for, or distribution requests for expenses. [00:34:33] They occur to, you know, potentially all the way back in January of that year, but it’s apprenticeship programs are now an eligible expense. They have to be registered with secretary of labor. and then also repaying student loan expenses. So $10,000 of your student loans, principals or inch principal or interest can be, you can use 529 distributions to pay for that. [00:34:53] And also $10,000 worth of. A sibling of a beneficiaries, expenses. And those are lifetime [00:35:00] limits as of right now. So it’s 10, $10,000 per beneficiary or sibling and beneficiary over the, over the lifetime of that. But, but it is encouraging to see. Expansion, in the usage of Washington 529 College Savings Plan. I think the apprenticeship, expansion is particularly important and that much more impactful because it makes that conversation easier for a parent who’s thinking about saving for their child right now and our future plans, the goal is to help that child become career ready, and that does not have to look like a four year year liberal arts university. [00:35:30]and it helps us have a much easier conversation with that parent that literally, no matter what your child’s dreams are, there’s. Very high chance, you know, recorders of, jobs these days require some form of post secondary instruction. And again, I may not be a college setting that could be, apprenticeship. [00:35:50] It could be certificate programs and vice unites keep are starting to catch up with being able to help families, save for those costs as well. [00:36:00] And so I did want to just touch on that cause it’s, it’s been a little overshadowed by what’s been happening with the Corona stuff right now. But that’s an impactful, you know, and it is an expansion, like you said, cause now what was that also the same time that they opened it up to K through 12 or was that prior? [00:36:16] I’m just remember. Here’s 1215 please. 17 I think, right? Yeah. I know how many, it’s interesting. There has been, they’ve chipped away at529 for a while to keep, you know, modifying things. There was actually a period of time many years ago where there was conversations about, should. All you know, should they have as generous of tax benefits? [00:36:39] But that was a very short period of conversation. Never since then, it’s been this continuing trend of expanding the usage and the K-12 one has been. You know, there’s been mixed reactions to that. There’s been a lot of politics involved in the conversation around the capable piece. We’ve obviously administer a program and stay out of that, but we are very [00:37:00] glad, especially when we see things pass it. [00:37:02] That increased the postsecondary. Opportunities. So again, it’s about looking ahead to the future and helping a child, achieve that. Or someone who wants to send themselves back, get further instruction and to become, to switch careers or move up the career ladder, that kind of thing. So yeah. Lots of options. [00:37:20] Right? So that kind of leads me to, pretty much my last question was what stayed the same? There’s been some changes, but what stayed the same? What’s still kind of the things that you want people to know are great benefits of the Washington 529 College Savings Plan plans? Right? So. The, the, the benefit being that you have a way to provide opportunity for your, for your child. [00:37:42] And that’s the most common thing we see is parents saving for young children. And the younger you can do it, the better. So the things that haven’t changed, as, you know, get a plan started early. Save what you can when you can. You know, families who make regular contributions regularly come out further than families who [00:38:00] only make periodic contributions. [00:38:01] We see they accumulate more in savings. And so as Jack getting shared early on in the conversation, reducing future student loan debt is a big piece of that. So students don’t come out of school with a future deference. Those fundamentals stay the same. Through all this and with, you know, the current economic turbulence, not everyone may be able to attend to their 529 plan right now and continue making contributions, but I would say as soon as you’re back in a position to do so, that’s one of the best things you can do, especially while your children are still young. [00:38:28] And again, you want to seek help from a financial professional. If you feel like you need help on your strategy, you know, how to prioritize retirement savings versus college savings. That’s probably getting even murkier right now in the face of all these screens. Healthcare costs and all that. So we’re not, you know, we don’t want to say that college savings is the most important thing a family can do. [00:38:48] I think that’s up to the individual family, but we think it’s particularly important piece of a family savings efforts and as much as possible to continue attending to that. And all the 529 benefits are still there. our programs are [00:39:00] going to be around a long time to help families pay for those future expenses. [00:39:04] Any, any other closing comments. I would just add that, yeah, it’s really challenging times for everyone and, and, and people may be fearful of, of what’s ahead, but I don’t think the habit of saving is something that’s ever going to get old or something that you would ever not want to be doing. So I think if. [00:39:23] Yeah. People just keep keeping a positive outlook. We’re trying to keep a positive outlook. I am very fortunate that my wife and I just had a baby girl, our first child, and we’ve already started her college savings. Granted this all [00:39:39] trying to find that that moment to wedge that. [00:39:46] Thank you. Thank you. And so we’re, we’re saving for her. Granted, we, are fortunate to be in a position where we are financially stable right now. We started saving her, but even before she was born. That’s another thing that hasn’t changed. You can open an account for a child before they’re [00:40:00] born. You named yourself as the beneficiary. [00:40:02] So that’s what I’d say is the earlier you can start, the better. And even with an uncertain future, you have dreams for your children or dreams for yourself about what you might want to do in the future. Yeah. And if you can, you know, make a contribution to those future efforts, it’s a great thing to do. [00:40:17] And whether you do that with Washington 529 College Savings Plan or another 529 plan or any other type of savings vehicle, the important habit to get into. Yeah, absolutely. The only other thing I would add to that is, you know, to, gather, gather their information and resources and do what they can to learn a little bit about the different ways of savings and make them. [00:40:40]those opportunities fit into the goals that they have as a family. You know, like everybody’s different. Everybody has their kids have different, goals and expectations. And that can certainly change as the kids get older too, you know? But, preparation and, you know, every good decision, I heard somebody say this in a speech one time, they said they were talking about [00:41:00] themselves and they said, every good thing I ever did started with the decision. [00:41:05] You know, and so your, your efforts, you don’t have to know like every step of the way. What is going to happen or isn’t going to happen. It’s just gets started, you know, every little bit helps. And you know, there’s always gonna. It’s always going to be your money, you know, you know it’s saved. Then you’re going to be able to take it back and do what you need to do if, you know, if it isn’t for one purpose or another. [00:41:28]there’s. Going to be situ conditions on all of those in this E 529 plans are not unique to that idea. but, but, you know, our, our thing has continued to be just to make sure that we’re helping families realize what, what these plans do and how they are, and then how they. That into their kids’ overall goals. [00:41:48] And you know, I started out with kids who were in elementary school and now they’re grown ups and have their own kids. And so now I look at this stuff from the lens of being a grandparent and you know, the excitement [00:42:00] that I have as a grandparent to see their, their future potential and, my own kids being grateful that there’s going to be, because of this mech, this pattern that we started to develop as a family. [00:42:14] To just save, you know, right. Started out just tucking away, you know, $5 a week and then $20 a month, and then turned into more and more because we focused on the effort. So yeah. And that is exactly how it starts. And I think people just need to remember that. It just starts with a little bit at the beginning. [00:42:34] And you know, I’m the face of 14 years later. I’m you, Luke. 14 years from now, you know, there’s nothing more comforting than, you know, setting up that bank link and sending off the money. Bam. It’s paid for. College is paid for. How easy is that? I mean, it’s just kind of mind blowing. So it’s a great tool. [00:42:56] It’s one of several tools, but it’s definitely a tool I think [00:43:00] families need to remember is available to them and learn more about. So, where can people learn more about, go ahead and re reiterate those websites and maybe phone numbers or whatever contact information you’d like to share. Okay. So WASTATE529.wa.gov okay. WASTATE529.wa.gov is the landing page, with kind of basic info. And then they would launch off from there to either the get program or the DreamAhead plan. So that’s the easiest contact or piece right now, because you don’t have to memorize two different websites, one and then 800-955-2318 is the toll free number for the GET program. [00:43:46] And (844) 529-5845 is the toll free number for the DreamAhead plan. So we also have a Facebook page, and as we kind of talked about earlier, we’re doing some [00:44:00] webinars. We’ve got the wa 529 knowledge cafe that’ll be weekly meetings various times during the week. And we’ve got them all set up right now for April and all through may. [00:44:12] So if anybody’s interested in wanting to. Talk, about Washington 529 College Savings Plan not just read it, you know, but to talk and dialogue and ask their questions. Join us in the cafe. You know, I’ll have it on every week. It’ll be me mainly facilitating at the beginning. I’m going to have my cup of coffee and we’ll just talk through the questions that they have and I’ll give, be able to give them resources that they need to get them to that place of, of. [00:44:37] You know, comfortable, comfortableness, and then hopefully they decide to, you know, open up accounts and just start saving. Yay. Okay. Fantastic. Well, I want to thank you both for joining me once again. I will just put on my calendar for next year, next year. So it’s great information as always. It’s trying times, things are. [00:44:59] A little bit, you [00:45:00] know, topsy turvy right now, but it’s still important to be thinking ahead to our features or the features of our kids. So I am grateful he took some time out of your day to day to come talk and catch. Catch us all up on this. Thank you for inviting us. It was good to see you. Yeah. Thanks Angie. [00:45:15] Really appreciate it.
Thank you to the Washington 529 College Savings Plan!
Angie founded Avea Financial Planning and is a fee-only advisor helping people retiring in 1-2 years, particularly PNNL employees, with tax-smart retirement planning, investments & fiduciary financial advice so they can be more confident and live life on their own terms.