Financial Literacy Education Provided by NEDCO

We wanted to spread the word about a great local organization that offers introductory financial literacy classes and counseling to our community. Neighborhood Economic Development Corporation (NEDCO), located in downtown Springfield, offers a monthly class series called Financial Foundations. The classes are offered in both English and Spanish and cover topics including financial goal setting, budgeting, tackling debt, improving credit, and understanding insurance. After attending the class series, participants receive individualized advice from a financial counselor.

For lower-income participants, enrolling in Financial Foundations is also the first step to opening an Individual Development Account (IDA), which is a grant-funded matched savings account that earns a 3:1 match on qualified savings.

For more information, here are a couple of links to NEDCO’s website:

Financial Foundations:

The IDA Program:

An Overview of 529 College Savings Plans

A number of our clients have been asking how they can help provide college funding for their kids or their grandkids, so we thought we would provide a quick overview of 529 college savings plans.

With nearly a quarter of a trillion dollars invested in these plans, Americans are increasingly using the 529 plan as a tool to save for future education needs. The basic idea behind a 529 plan is to allow families to save for college costs with tax-deferred earnings and tax-free distributions for college-related expenses. Some states, such as the state of Oregon, also offer an income tax break on contributions to 529 plans.


  • Beneficiary – Anyone of any age can be named as a beneficiary (e.g. relative, friend, yourself). A beneficiary can have more than one 529 plan (but only one per state).
  • Donor – Has control of the account and can change the beneficiary to another member of the family or to himself or herself.

What can the funds be used for?

  • Qualified education expenses, such as tuition, fees, books, computer technology, related equipment and/or related services such as Internet access, room and board.

Where can the funds be used?

  • At any eligible educational institution, which the IRS defines as: “… any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.”


  • Increasing college costs – in the U.S., college costs have outpaced inflation for decades.
  • Tax-savings.
  • If you don’t use the funds for education, you can still withdraw them, though they will be taxed at income tax rates and subject to a 10% federal penalty tax.

Please let us know if you have any other questions on the 529 plans. We also recommend the following websites for additional resources and information:

Morningstar Conference

By: Jonathan Brandt, CFP®

Morningstar Conference croppedWe make it a habit to attend industry conferences each year to keep abreast of the best thinking in our field. In June, I ventured to Chicago in search of current insights at the Morningstar Investment conference. Here are just a few of the highlights you might be interested in:

Active vs. Passive Investing – Passive investing through index mutual funds and exchange traded funds has enjoyed immense popularity during the last several years. This is largely due to a strongly positive market and extensive marketing campaigns trumpeting low fees and suggesting that finding active investments that beat out passive ones is difficult to do. Some pertinent points:

  • While passive investments can be successful, especially in bull (up) markets they fare poorly in down markets. They get 100% of the downside which may be hard for people to stomach if the market drops substantially.
  • Passive investing inherently focuses on past performance of companies in an index that have done well in the past and adds more money to those companies. This often means buying at a high price.
  • Many active managers try to buy what they are think is a good value and is likely to do well in the future. This approach puts more emphasis on capital preservation and risk management.

Low Interest Rates and the Stock Market – The federal government has kept rates historically low for an unusually long time which has not allowed the market to correct after many years of gains as it normally would. Steven Romick of FPA Crescent Fund (a Journey Tree holding) said “The perversion of low rates has lifted prices across the board.  We don’t see many investments with good risk/reward ratios.” (FPA Crescent has nearly 40% in cash due to a lack of good opportunities.)

Emerging and Frontier Markets – The quality of investment opportunities is rapidly improving due to the following factors:

  • Many emerging market governments have less debt than a number of developed country governments, creating a better environment for economic growth.
  • Many countries have a fast growing middle class creating more financial stability and greater consumer demand.
  • Political stability and financial accounting standards have improved leading to consistently higher economic growth rates than almost all developed countries enjoy.
  • Even frontier markets are showing great potential. For instance, although it has been most often depicted as a terrorist hotbed, Pakistan’s economy has grown over 25% over the last 5 years.


Roth Accounts and Required Minimum Distributions

By Kath Suchan, CFP®, CLU®

Siblings, you got to love them. First of all, I am the “baby of the family” and sometimes it is difficult for my five older siblings to realize that I may know just a bit more than they do when it comes to financial planning issues. There are times I feel like I am a five years old again carrying on the “Is so,” “Is not,” “Is so,” “Is not” intellectual exchange.

This article is a result of a lengthy discussion I had with one of my siblings regarding required minimum distributions (RMDs) and Roth accounts. In a nutshell, my sibling felt that “Roth” was equal to “No RMDs ever!” regardless of the account type. I then had the pleasure of [gently] correcting him. In case you are wondering, below are some common situations where RMD rules DO apply to Roth accounts.

  1. Inherited Roth IRAs (also known as Beneficiary Roth IRAs)
  2. Roth 401k accounts after you retire
  3. Roth 401k accounts if you are still working and the “5% owner” rule applies

Unfortunately, there is no way to avoid RMD rules when it comes to Inherited Roth IRAs. The good news is that you may be able to rollover your Roth 401k to a Roth IRA and voilà that account avoids RMDs while the account owner is alive.

In the case of my sibling, he is a sole proprietor with a Solo/Individual Roth 401k. He would not “cry uncle” until I sent him the following email.

Hello brother!

It was good to talk with you on the phone last night. I want to follow up on the discussion we had regarding RMDs and Roth accounts. Since I am not licensed to practice tax law, I am providing the below quote from the IRS website. I have underlined it so you don’t miss those important sentences.

What types of retirement plans require minimum distributions?
The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs.

The RMD rules also apply to Roth 401(k) accounts. However, the RMD rules do not apply to Roth IRAs while the owner is alive.


I hope this helps and thanks for keeping me on my toes.


Sister Kathy


Announcing the New AdvisorClient® Mobile App for your iPhone®!

TD Ameritrade Institutional is pleased to announce that you can now take the convenience of with you, wherever you go, with the launch of the AdvisorClient Mobile App. AdvisorClient Mobile enables you to view real-time account balances, positions and transaction history from your Apple iPhones.*

Other convenient features include:
• Consolidated account balances
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• Detailed quotes
• Third-party research
• Quick access to Advisor contact information

If you wish begin using AdvisorClient Mobile, visit the AppStore.

*AdvisorClient Mobile is designed for Apple iPhones but will also function on Apple iPads.

Apple, Inc. is a separate, unaffiliated company and is not responsible for TD Ameritrade services and policies. iPhone and iPad are registered trademarks of Apple, Inc.