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Raymond James Financial Services, Inc. Member FINRA/SIPC 

301 Yamato Rd. Ste. 3160 Boca Raton, FL 33431


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April 1, 2015


I do a lot of 401(k) planning for businesses and one of my favorite 529 strategies ties right into the 401(k) market.


A 529 Plan is a college savings vehicle that has certain tax advantages if used for higher education.


There are certain providers in the 529 space that allow their clients to attach a 529 plan to their business. This provides participants the opportunity to contribute to these 529’s through a direct payroll deduction much like contributing to a 401(k) through direct payroll deduction. Now employees can contribute to their children’s 529 plan directly from their paycheck.


I have found that structuring the 529 contribution to come right out of an employees paycheck allows them to “forget” about saving for their children’s college. They can simply contribute to the 529 plan much like they are used to contributing to their current 401(k) plan. But that’s not even the best part!


By attaching the 529 to the business, all participants are investing at NAV or Net Asset Value. This means that you put in a dollar, that whole dollar gets invested with no upfront sales charge or load*. This is a huge savings that many people don’t particularly understand. Below is an example of how much more a participant can potentially save by getting their investments at NAV. (Assuming a growth rate of 6%):


  • John Smith contributes $200/month for 18 years at NAV

    • = $77,470.64 when the child reaches 18 years old

  • John Smith contributes $200/month for 18 years NOT at NAV with a sales charge of 5%**

    • =$73,597.11 when the child reaches 18 years old

By receiving the investments within the 529 at NAV or Net Asset Value John Smith has saved an additional$3,873.53 for their child at age 18.


This is just one of many strategies used in the 529 space. If this particular strategy sounds useful for you and your business, I am happy to discuss it with you.


Joseph Carpenito

Financial Advisor

Raymond James Financial Services, Inc.



Opinions expressed in this article are those of the author and are not necessarily those of Raymond James, and are as of this date and are subject to change without notice. Any hypothetical examples are for illustrative purposes only. Actual investor results will vary.* Although the investment is being made at NAV with no upfront sales charge or load, there may be internal expenses associated with the chosen investments.** A 5% Sales charge is being used for illustrative purposes only and may not be what a participant is charged if the investments are not invested at NAV.The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. Investors should consult a tax advisor about any state tax consequences of an investment in a 529 plan.



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