529 Plans A Significant Part Of His Professional Toolbelt

25 Years: John Phillips has been a Chartered Financial Consultant with New York Life for 25 years.

A 529 Plan is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

There are two types of 529 plans: prepaid tuition plans and education savings plans. All 50 states and the District of Columbia sponsor at least one type of 529 plan. In addition, a group of private colleges and universities sponsor a prepaid tuition plan.

Any parent, relative, or family friend can invest in a 529 plan to finance a child’s education. Savings have an opportunity to grow faster because you defer paying taxes on any investment earnings. And if you use the 529 for eligible expenses, you don’t pay any federal taxes.

Each state’s plan has its own rules and requirements, but 529s are meant to fund any type of education expense: books, college fees and tuition, trade school, and private or public K-12 education. While some state plans offer state tax benefit to their state residents, you don’t have to choose your own state’s plan; you can choose any one you like. NYLIFE Securities LLC, has access to 26 plans from 26 different states.

John Phillips, a New York Life Representative & Insurance Agent, was not fond of 529 plans until recent years. “In my financial planning practice, I look down on money that has a single purpose,” said Phillips. “In my world, good planning means giving yourself a lot of good options. In recent years, th

Founded In 1845: New York Life Insurance Company is the third-largest life insurance company in the United States and the largest mutual life insurance company in the United States.

ey [529 plans] have evolved to where they are more flexible, and they can accomplish a multitude of purposes.”

These plans invest your contributions in mutual funds or similar investment choices available in the plan. You have several investment options to choose from, and the 

account’s value will go up or down based on the performance of your investment choices. If used for qualifying expenses, you can take the money out tax free.

In 2018, 529 plans expanded to K-12 education. With the Tax Cuts and Jobs Act, which was signed into law in December 2017, families are able to use funds in an eligible 529 college savings plan for more than college tuition and related expenses. Based on this law, each family can also use up to $10,000 in 529 funds for private K-12 tuition without any federal taxes or penalties. “In recent years, 529 plans have expanded to apply to vocational schools, trade schools, and apprenticeships,” said Phillips.

If interested, Phillips can get a certain amount of information over the phone. A face-to-face meeting would follow to go over details on how to set up the plan that is right for you. In fact, Phillips is a Chartered Financial Consultant (ChFC) so he is able to go over your entire portfolio. Phillips just celebrated his 25th anniversary with New York Life. “I insure people, not things,” said Phillips. He sells health, disability, life, and long-term care insurance. The bulk of his practice is divided between investment management and annuities.

John Phillips grew up in Lake County, Illinois, and moved to Colorado in 1976. After working for his dad’s book binding business in Greeley, he went to Notre Dame for four years and then returned to Colorado to obtain a master’s degree in Transportation Management from CU. He can be reached at 303-744-2441 or jdphillips@ft.newyorklife.com. He is located at 3200 Cherry Creek South Drive in Denver.