The HMEPS Financial Counselor is available to meet with participants and their immediate families to offer information regarding retirement planning, investments, life insurance, education planning, estate planning, social security, pension, DROP and other financial issues.

This is a free service, and is provided by a Certified Financial Planner™.

The counselor is an employee of HMEPS and does not receive compensation of any kind from the sale or recommendation of financial products or services. The goal is simply to provide objective, unbiased, professional financial coaching to HMEPS participants.

Contacting the Financial Counselor

Steve Waas, CFP, HMEPS 1111 Bagby, Suite 2450 Houston, TX 77002 Phone: 713-595-0140 e-mail: swaas@hmeps.org

Resources

Resources on this page are organized under the following three areas. Click on the link (or scroll down) to go directly to that resource:

Questions From HMEPS Participants

The first section, Questions From HMEPS Participants, contains exactly that - questions from our participants regarding financial questions they would like answered. If you have a question that is not answered please send it to Steve at: swaas@hmeps.org Because of the volume of submissions Steve is not able to answer every question or to post every question on this site.

Note: this is for educational purposes only. Do not send personal, confidential information. To discuss your personal situation, please call for an appointment.

Q: Can I Transfer Funds from My IRA into a 529 College Savings Plan? (Posted 5/22/09)

A: No.

Many people find that a 529 Plan is a terrific way to save for a child's college education. What makes 529 plans particularly appealing is that the profits and interest made on the investments inside the 529 can be taken out tax free, as long as the funds are qualified college education expenses.

Instead of saving new money for this purpose, however, some people would like to be able to use existing savings in IRA accounts. Unfortunately, this is not allowed.

However, if using funds from an IRA is the only way to save for a child's college education, you can consider taking the money directly out of the IRA and using it to pay for college. Normally, if you take money out of an IRA before age 59½ you have to pay a 10% penalty (plus all due taxes) on the amount withdrawn. However, at this time there is an exception for qualified college expenses. In this case the 10% penalty does not apply.

Keep in mind, however, that the money taken out of the IRA will most likely be considered income by the IRS and you will still have to pay taxes on it (all you avoid is the additional 10% penalty).

Other things to consider before using IRA funds for college expenses:

• Will this leave you enough money for your retirement goals?

• By taking the money out of the IRA your taxable income will probably go up - and this could even put you in a higher tax bracket

• If you plan on applying for financial aid for the child's college education, note that taking money out of the IRA is considered income, and this may count against your child in calculating the financial aid they are eligible to receive

• Your tax return will be slightly more complicated than usual

 

More articles will be added on a regular basis, be sure and check back for new additions.