SLCo Employee Wellness Wellcast
The SLCo Employee Wellness Wellcast is a fun, entertaining, and enlightening look at health and wellness. It breaks down complex health topics and interviews experts in the wellness field to help participants live healthier lives.
SLCo Employee Wellness Wellcast
Financial Wellness with Jenny Sass of My529
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Why Financial Wellness Matters
SPEAKER_00Hello and welcome back to the Employee Wellness Wellcast. I am so glad that you all are tuning in today. It's a new month and I'm going to be making a little shift from the topics that we've been addressing recently to address a new topic and another dimension of wellness that plays a huge role in our overall well-being. That is financial wellness. So let's start today's episode with a quick question. Raise your hand, whether it's physically, virtually, or just mentally, if thinking about saving for the future, future education, for future expenses, or just navigating your financial planning feels at least a little overwhelming. I'm guessing most of us have been there. When it comes to long-term saving, it is easy to get bogged down by jargon and restrictive rules, or just not knowing what options are available to you, or even from there, not knowing where to get started. But today we want to flip the script on that a little bit and how we approach our financial wellness. We're going to take some of the guesswork out of education savings in particular by looking at solid practical tools that can help us to build peace of mind. We have a special guest joining us today who is a representative from My529, Jenny Sass. She is going to help us break down these accounts, how they actually work, debunk some common myths, and share some simple steps to help us boost our financial wellness. So let's dive in and upgrade our financial fuel. Well, thank you again, uh, Jenny, so much for coming on and giving us some information about My529. Tell us a little bit about yourself.
SPEAKER_01Sure, I'd love to. So I've been with My529 now for um close to 12 years. So it's it's been great working for them and to be able to promote um saving for higher education. It's something that I feel really good about getting out in the community and talking about. So I'm I'm really glad to be with you today and able to talk a little bit more about what 529 plans are.
SPEAKER_00Awesome. Well, thank you again so much for being here. But yeah, let's look dive in and look at what 529 is and go over common questions. For
What A 529 Plan Really Is
SPEAKER_00someone who is new to education savings, what makes a 529 plan different from just a standard savings account or just a brokerage account for your child or loved one?
SPEAKER_01Yeah. So to give a little bit of background about 529 plans. So especially with us rebranding in recent years, um, sometimes we get, you know, are you a DNA company questions? Oh but 529s are it's actually a section of tax code that was uh that came into being 30 years ago. So 529 plans generally and my 529 specifically are celebrating 30 years. And so they were born out of a need for families to have a way to save for college that would give them some tax advantage, right? So um there was this need and this uh recognition that college costs were continued to rise. And so we they wanted, meaning Congress wanted to make it you know more manageable for families to save. And so the big thing with 529 plans is that they are tax advantaged, and so they are a post-tax investment. So I just want to make that distinction because sometimes there's a little confusion that they're pre-tax, but we do make that comparison to a Roth IRA, that it's post-tax. And so when you open an account and you do that directly with us, because sometimes people will ask, oh, do I go to a local bank or credit union to do that? But you go directly to the 529 plan to get an account opened up and you pick an investment option, and any earnings on that investing are tax-free, both federal and state, if it's used for what we term qualified education expenses. So uh we'll talk a little bit more about that later. In addition, there are different kinds of 529 plans. So Utah has a direct sold plan. And what that means is that you come directly to us to get signed up. We don't offer any sort of financial advice as part of that, but there are lower fees because you're not getting that addition of any sort of financial advice. Some states have advisor sold plans, you know, where uh financial advisor is helping them along in the process, but the the fees are higher. Uh, we're really fortunate in Utah because we have a great 529 plan. We are the third largest direct sold 529 plan in the country, and we have consecutively received the Morningstar Gold rating, and we have received their highest distinction now for 15 years running, and there's a very small list of 529 plans that receive that distinction.
SPEAKER_00Wow, that's amazing. Thank you for giving us all of that information.
Qualified Expenses Beyond Tuition
SPEAKER_00You mentioned qualified educational expenses. What does that mean exactly? Is that strictly for tuition or what does that look like?
SPEAKER_01That's a great question. I think sometimes people look at it and think, oh, that's just pain for tuition, right? But actually, there is a whole list of qualified education expenses that are covered. And in the last, like I said, almost 12 years that I've been there, additional expenses are added, which is great. So it keeps growing. So some of the core things are tuition, room and board, supplies, equipment, computers, internet service, fees, that type of thing. And so sometimes, you know, when someone says, Oh, my kid has a full ride scholarship to maybe a university, there's things that the full ride won't cover. And so it's wonderful that the 529 plan covers that as well. In addition, K through 12 expenses have been added as well. And so that changed last summer with the passing of a bill. And that amount annually increased from $10,000 to $20,000 annually. So K through 12 expenses are covered. In addition, there's $10,000 of student loan repayment that can be made with the $529 funds as well. And we'll talk a little bit more about some other things relating to the 529 plan that have made it more flexible. But uh in addition, credentialing has been added. So if you're looking within your career, and sometimes people think, you know, who am I opening this for? Right? You can open it for yourself. A lot of people open it for their children, but you could certainly open for yourself and use the funds to continue within your career path.
SPEAKER_00Oh, that's fascinating. Thank you. That's that's good information and good things for us to be able to think about.
Investment Choices And Managing Risk
SPEAKER_00So when it comes to these types of accounts, it sounds like there are lots of investment options. How are these actually invested? I don't know if this is something you can answer because you said they're not managed and you don't provide advice, but how do we manage risk as our children are getting closer to college or if we're saving for ourselves?
SPEAKER_01Yeah, so we have three buckets of investment option choices with my 529. And so one is enrollment date, and that's gonna be familiar to folks because it follows a path similar to saving for retirement. The investing is gonna be more aggressive when a child is younger, but it will get more conservative as they age. The second is a static option, and that is just kind of autopilot, right? As it implies. And then we also have a customized option. And so those are the choices that we have. There's different options within those. And if you visit our website, we have an investment return page, and you can see historically how our different funds have performed. And uh, you know, if you have a financial advisor or if you have a member of your family that's savvy with investing, they might be someone to just talk to. The federal government also allows for two investment option changes per year. So if you know, maybe you're not liking your choice, you have the ability to change course and to choose another investment option.
SPEAKER_00Okay, very cool. And it's nice that we're not locked into one thing once we pick it. Thank you for sharing that. I feel like that also grants some peace of mind about being able to invest and not being stuck. So that's great.
Starting Small And Inviting Contributions
SPEAKER_00The next question is do I need a large amount of cash to start a 529 account? And can family members contribute? How does that work?
SPEAKER_01So that's a great question. And every 529 plan is different. So every state has a 529 plan. You want to look at your home state's plant first, in this case Utah, because they may offer additional tax benefits. So, in addition to the tax-free growth that I talked about, if used for qualified education expenses, there's also a Utah State tax credit extended to account owners who open an account for a child that is under the age of 18. So we don't require any minimum balance or any initial contribution or any ongoing balance. So we really make it accessible to people. And even small amounts can add up over time. So I just want people to realize, too, that paying for college is a combination of things, right? It's important to fill out the FAFSA just in case, you know, there's some financial aid available that way. And there's also scholarships and grants, but any money that people are saving, then they don't have to pay back a student loan with interest. And um, I don't have any children, but I open an account for my nephew, and I'm just putting away $25 a paycheck, and I'm able to do that through payroll direct deposit. You don't necessarily have to do it that way. Again, there's there's no obligation to put money in, but I think for me that it just it kind of makes it out of mind. You know, I have a little money tucked away, and I know that there's power with the time horizon of investing and just that compound earnings or interest idea over time. And it's never too late to start, right? I have people asking me, you know, when should I get started? I do make that comparison that you wouldn't start saving for retirement right before you retire. And people understand that, but I know when you have a new baby that it's certainly overwhelming to think among all the other things, that I should start a savings for their education. But that is a great time to get started.
SPEAKER_00Yeah, for sure. I mean, that's probably not the first thing on your mind, but it is a good time to get started. Yeah. And then you already went in and answered my next question. So thank you for that. And that was if you're not a parent, can you start an account for a family member, such as a niece or nephew or grandchild? So thank you for sharing that information. I think I'm gonna work on opening one for my niece and nephew, like you did. Yeah.
SPEAKER_01Yeah, no, it's uh again, anybody could open an account. The accounter needs to be 18 years of age or older, have a social security or tax identification number, and a US physical address, but they could open it for a grandchild, a child, a godchild, a niece and nephew. Um, we used to say in our presentation, even the kid that mows your lawn, um, I don't think a lot of people have that kind of discretionary income, right? Uh, but the point was that you can really open it for anybody, you know, that's perhaps someone in your life that you would feel strongly about helping them with their educational pursuits, right?
SPEAKER_00Amazing.
Scholarships Leftover Funds And Control
SPEAKER_00So I guess the next question then is when it comes to these types of accounts, I feel like a big fear that would be a possibility is overfunding. So what would happen if, like you said, if the child gets a scholarship or decides not or decides not to attend college, yeah, um, is that money then just stuck there or like what can we do with that?
SPEAKER_01Yeah, so a few things. The account owner is always in charge of the money, right? So they get to decide where it goes. I think this is important to know because I know there are some savings vehicles for kids that once they reach a certain age, the money was turned over to the beneficiary. But in this case, the account owner always has control. If a child were to get a scholarship, how the 529 is formatted, you could take out the amount of the scholarship of the account and not be subject to the 10% federal penalty on the ear, just the earnings portion. You just have to pay tax on the earnings portion. So if you were to make an unqualified withdrawal from, like let's say you just had to tap into those 529 funds for some reason, um, you would just have a 10% penalty on the earnings portion of that money as well as taking out the taxes. Because again, it's a ghost tax investment. Recognizing that if someone gets a scholarship, we don't want them to be penalized because of that. In addition, you can use it for future education such as graduate school. And like I mentioned earlier, you could use it for credentialing within your career path. Um, you also have the ability to move the money to another member of the family. And there's a pretty broad list of who you can move the money to. And um, you can look at our program description, which we encourage everybody to read just to see what that list is. But I've kind of thought through that scenario of the $10,000 student loan repayment. And kind of the scenario that I've thought of is if you were to marry somebody, maybe you don't have any student loan debt, right? Because you had a 529 plan, but your spouse has some student loan debt, and you could transfer that money over to your spouse to help them pay off their student loan debt. So I think that's a really nice feature. And then we'll talk a little bit more about this, but you can also roll over leftover funds now to a Roth IRA. And so this has really made a lot of people, I think, happy about increased flexibility with these accounts in the case they're overfunded, there's leftover fund type situations.
SPEAKER_00Amazing. Yeah, it sounds like there are so many benefits to having one of these accounts. And I feel like most of us didn't know any of that. So thank you for sharing.
Roth IRA Rollover Rules Explained
SPEAKER_00You just mentioned that 529 to a Roth RA rollover. Um, how would that work?
SPEAKER_01Yeah, and pretty much the only guidance that we've received from the federal government is that the account, the 529 account, needs to be open for at least 15 years. The funds must roll over to the beneficiaries, Roth IRA, and the total rollover limit is $35,000. So that's a pretty big chunk of change to have left over in there. But I think it's a great way to seed your beneficiary's retirement if that's a scenario that you see yourself in.
SPEAKER_00Very cool. And then, like you said, if we exceed that $35,000, then there's still other options that can be used. It can still be used for other education. You can transfer to other family members. So yeah, it sounds like there are so, so many benefits to these accounts.
How To Compare Plans By State
SPEAKER_00Absolutely. Yeah, I guess like heading kind of towards wrapping up a little bit, what would you say is the most important advice that you could give to families that are evaluating 529 plans?
SPEAKER_01Yeah, um, a couple of things. Some people will ask, you know, if they move out of state, should they keep their, you know, Utah plan? Should they look at their states plan? We always tell people to look at the state's plan that they're residing in first, just to see, you know, if there's a tax benefit attached to that. And there's actually a really great website called the 529 network.org that it's an interactive map of the United States. And so you can just click on and see the state of your residence or maybe a state you may be moving to to see what kind of tax advantages might be available to you. So you don't want to miss out on those. I think in Utah, we're really fortunate that we have a great 529 plan. And so definitely we have a great, great tax credit here, in addition to just a tax-free growth. I think the big thing is it's never too late to start. And I think that would probably be the biggest takeaway because sometimes people will say, Oh my goodness, my child's already 14, 15. I think at that point, once they start being able to work, they could tuck a little bit of money into their 529 plan. We have a great gifting program available that once you open an account with us, you're issued a gifting code that you can share with family and friends. So I like to call it college crowdfunding, right? Okay. So get everybody involved, get the grandparents involved. It's a much more meaningful gift, I think, to give the gift of education. And maybe the child won't appreciate it at eight, but they'll appreciate it at 18 when they're getting ready to head out into their college path. And just to bear in mind that 529 funds can be used any school that accepts federal student financial aid. So it's not limited to just schools in Utah. It can be a community college, it can be a trade or tech school, a four-year university, it could also be a registered apprenticeship program. So just to know that there's a lot of flexibility because we're kind of seeing with this Gen Z generation that they are tending to like going into the trades because it may just be a two-year program and they're gonna make six figures right out of college being an electrician or something. So it's just good to know that there's there's flexibility that way.
SPEAKER_00Yeah, that's amazing. Yeah, it's good that there's so much flexibility because yeah, we never know what trends are gonna look like in 10, 15, 20 years. But it's good to know that we can use it for any of those things. Absolutely. Is there anything else that you think we should know just to help us prepare or our help prepare our loved ones to be financially healthy in the future?
Estimator Tools And New Parent Incentives
SPEAKER_01Yeah, so we do have a free college savings estimator tool on our website that's free to anybody if you own an account with us or not. But it's a great way just to start playing with numbers. As I mentioned earlier, paying for college is a combination of things. I think thinking about paying for the entire amount of college is very overwhelming to folks and maybe not realistic, right? But anything that you're able to save is gonna help prevent student loan debt that you're gonna have to repay back with interest. And so even if the amount you're saving, like in the case of my nephew, if it's just to help him pay for his books or whatnot, I think that's that's really helpful. I will mention we have a new parent program called Incentified. You may have seen some of the billboards around town. They're kind of fun. But um, the the general concept is if you have a new baby born here just recently, and you go to our website, you can get set up, but it's a hundred dollar contribution from the parent, and folks can gift into their account too. If they maybe don't have the funds to make that $100, they can reach out to family and friends. And if they put $100 in their account, years one through five of that baby's life, years one through four, my 529 will put a hundred dollar a year incentive contribution, and then in year five, they'll receive five hundred and twenty-nine dollars from us. So they could receive up to $929 from My529. So it's it's just really a good way to start your child on this positive trajectory of savings. We also have a bookmark design contest, a scholarship contest going on this month called Make Your Mark. And so I would encourage folks, you can go to our website in our little hamburger menu. You can click on our scholarships and promotions page and get information about that. We award $2,000 scholarship accounts for those who win that contest. And our categories are K through 3, 4 through 6, 7 through 8th, and 9th through 12th grade. So basically, you just use your artistic ability and create a bookmark. It doesn't have any particular theme. We're just obviously asking you not to use license characters, right? But we have judges that will pick some winners, and we have eight winners that we award $2,000 prizes to. So that's a great opportunity for um a scholarship offering from us as well.
SPEAKER_00Wow, that is amazing. So it sounds like there's a lot that My529 is really offering the community. And thank you for sharing all of that with us. I feel like that's been a lot for us to take in, but it's a lot that we can use to really help ourselves in the future.
Where To Learn More And Get The Match
SPEAKER_00Absolutely. Lastly, where would we want to go to view the specific tax benefits and compare the investment options? You mentioned the 529 network. Is that where we would go?
SPEAKER_01Yeah, if you want to look across the country, all the different plans available. 529network.org is a great resource. To learn more specifically about my529, go to my529.org, and that's where you can get signed up. You can use our free college savings estimator tool. We have some really handy intro videos on different topics. We have all our investment returns that you can peruse and all the different information that you could need, including our program description to get started. And I have extended a $20 promotional map to offer to Salt Lake County employees that will be shared out. But what this is, if you're new to My529 and meet the criteria, if you open one account, if you open multiple accounts, seed it with $20. Um, we'll do a one-time $20 match. So it's just a thank you and a you know, a great way to give yourself a little boost at the beginning.
SPEAKER_00That's amazing. I'll be sure that I go ahead and share that with all of our viewers and all of our listeners. And we'll also take it to the different events that we'll be at this month to make sure that people have access to that. So thank you so much for extending that to us and for giving us all of this information. Jenny, you are wonderful for joining us today. And we appreciate you really helping us to prepare now and be aware of the options that are out there to plan for our financial wellness. Thank you so much for being here today.
SPEAKER_01Yeah, thank you. I appreciate the invitation to talk about my 529. Like I said, I'm I'm passionate. I think education is important and having the ability to save with a 529 plan is a great option for parents and families.
SPEAKER_00I agree. Thank you again so much for sharing all of that with us. And thank you, everyone, for taking the time to listen. I hope you all have an amazing day and month. And until next time, stay happy and healthy. And if you want to take advantage of the offer that was extended to us so generously by Jenny, the path for doing that is going to my529.org and opening up an account. There will be a promotion code area. And just in that promo code area, enter 2026 capital S L C O when prompted. I will also have that information for you all later on in the month and at other events. But please take advantage of that and um take a new step towards financial wellness. Thank you so much and have a good day.