Learning Quest® Advisor 529
Build Relationships. Build Loyalty. Build Your Client Base.
Build Their Assets and Yours
Financial Advisor Magazine has credited top advisors who regularly earn more than $1 million a year in income with having three distinct characteristics that drive their success¹:
They manage a holistic relationship with their clients that allows for proactive advice and involvement.
Happy & Loyal Customer Base
They foster a happy and loyal customer base that readily provides referrals and additional assets under management.
They have a pipeline of new affluent prospects from current clients and centers of influence.
Offering higher education savings product options to your client base provides you with an avenue for achieving all three of these characteristics. Adding college savings options to your product line-up shows your depth of investment offerings. You can demonstrate that you can meet all your clients' investing needs, from short-term goals like a new car or vacation to long-term goals like retirement and college savings. Plus, you can bring in additional assets from clients and their immediate and extended families.
Foresee investors' needs. Be a one-stop shop for all your clients' investing needs so they can consolidate their assets with you.
Deepen relationships. Provide a comprehensive view of your clients' goals and help them make better financial decisions.
Protect your client base. Secure your clients' college savings assets before they look elsewhere for advice.
529 Plans Offer Opportunities to Gather Assets
As a college savings option, 529 plans provide investors many unique benefits for their tax and estate planning and overall wealth management. An estimated $235.4 billion in assets are in 529 savings plans across the country, as of 2016.²
Because anyone can use a 529 plan to save for higher education costs, you can promote them as an investment vehicle to a large percentage of your existing client base and use them as a tool for attracting prospective clients. Parents, grandparents, friends or even the future student can open a 529 account. This becomes a great tool for multi-generational planning.
Key 529 Plan Advantages Include
The student may use the money to pay for qualified education expenses at any accredited university, college or approved technical or vocational program.
Your clients can maintain control of the 529 plan account and are allowed to remove contributions and future earnings from their taxable estate.
Your clients can maintain control of the money if they are the 529 plan account owner, and anyone can contribute to the account, expanding your sales opportunities.
High Contribution Limits
State-sponsored education savings programs may allow larger investments ($250,000 to $350,000 as a lifetime limit) compared with other education savings methods.
Income Tax Benefits
Why Choose Learning Quest® Advisor?
Learning Quest Advisor, sponsored by the state of Kansas and managed by American Century Investments®, was specifically designed for advisors to help clients reach their higher education savings goals.
A partner you can trust.
With more than 55 years of experience, American Century Investments is dedicated to helping advisors like you grow their businesses.
Multiple investment managers.
Choose from portfolios using funds from American Century Investments, T. Rowe Price, Principal® Funds, and American Beacon.
Resources to help.
American Century Investments offers wholesaler support, a dedicated 529 service team and various marketing materials and sales tools to help you understand and promote Learning Quest Advisor.
Frequently Asked Questions (FAQs)
Who can contribute to a Learning Quest® Advisor account?
Anyone who is a U.S. citizen or resident can open an account and the account can be established for anyone, including one's self
There are no age or income requirements
Government entities and not-for-profit organizations may also use this program to fund scholarships
How can the account be used?
The account can be used without penalty to pay for qualified education expenses at accredited post-secondary institutions anywhere in the U.S. Your client may withdraw money at any time; Qualified withdrawals may be used for tuition, fees, books, supplies, equipment required for enrollment, and room and board.
The earnings portion of a withdrawal used for qualified education expenses is federally tax-free. (non-qualified withdrawals are subject to 10% penalty and state and federal income taxes)
My clients live in another state. Why should they invest in the Kansas plan since they cannot take the state income tax deduction?
The state income tax advantage should not be the primary reason to invest in Learning Quest Advisor. Instead, consider the goal and related factors that will be critical to creating adequate investment needed to pay for college:
Consider who's managing the underlying investments to ensure that experienced investment managers, skilled at managing many different investment styles through many different market conditions, are overseeing the account.
There is a choice of three tracks that vary in risk tolerance and the time until the money is needed. Some state plans may not be properly diversified or do not rebalance. These are important factors that allow the money to grow in order to satisfy the ever-increasing cost of college.
Out-of-state residents get the same federal tax-deferred and tax-free treatment as in-state residents.
What happens if my child doesn't go to college or if I end up with more in the account than he or she needs for college? Is there a penalty?
If your client does not use the withdrawal for qualified educational expenses, the earnings portion is subject to a 10% federal penalty tax plus required taxes. Your client can request a penalty-free withdrawal in the event of the death or disability of the student or if the student receives a scholarship.
You can change the beneficiary at any time in order to keep the account going and avoid (or at least delay) taking non-qualified withdrawals when the original beneficiary doesn't need those funds.
Will investing in a 529 affect my client's financial aid eligibility?
Federal financial aid may be available to a student even if a parent or student owns a 529 account. Part of the financial aid process is to determine a student's financial need. Parents will need to include 529 assets on which they are the Account Owner as an investment in calculating their net worth on the Free Application for Federal Student Aid (FAFSA). Assets in a 529 account owned by a student, or a custodian of the student, will also be considered assets of the parents. Assets held in a 529 account by someone other than the parents or student, such as grandparents, are not considered in the calculation for financial aid.
NOTE: This information is only a summary and not intended as advice. You should consult a financial aid advisor or the U.S. Department of Education's website at www.ed.gov for more information about financial aid.
Can my client contribute to more than one college investment plan at the same time?
Yes. Contributions can be made to both a Coverdell Education Savings Account and a 529 college savings plan in the same year for the same beneficiary. Clients may also transfer money from an Education Savings Account to Learning Quest Advisor. This provision also includes rollovers from one state's 529 plan to another state's 529 plan once per 12-month period.
Are the social security death benefits affected (or reduced) in any way because a decedent owned a Learning Quest account for a designated beneficiary that would soon be receiving a death benefit?
There should be no reduction in death benefit or survivor benefit. Presently, there are no rules that govern 529s with Social Security in this regard.
Can a person take a state tax deduction by "transferring" their UGMA/UTMA or Coverdell Education Savings Account?
For Kansas taxpayers UGMA/UTMA and Coverdell ESA "transfers" will allow for a deduction for the beneficiary (who must become the account owner) for the full amount (up to $3,000 for single filers and $6,000 for married filing jointly) transferred into the Learning Quest account. Keep in mind that the "new" account owner/beneficiary must have an income to take a deduction. If you live in other states, please consult a tax advisor for information about deductibility.
Is there a way to view and download my client's account information?
What happens if the account owner moves?
No matter which state they live in, they can invest in Learning Quest Advisor.
Source: "More Secrets of the Elite 1200," Hannah Shaw Grove and Russ Alan Prince, Financial Advisor Magazine, April 2006.
Source: Strategic Insight, 1Q 2016.
The availability of tax or other state benefits (such as financial aid, scholarship funds and protection from creditors) may be conditioned on meeting certain requirements, such as residency, purpose for or timing of distributions, or other factors.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
Before investing, carefully consider the plan's investment objectives, risks, charges and expenses. This information and more about the plan can be found in the Learning Quest Advisor Handbook, available by contacting your financial advisor or American Century Investment Services, Inc., Distributor, at 1-800-345-6488, and should be read carefully before investing. If you are not a Kansas taxpayer, consider before investing whether your or the beneficiary's home state offers a 529 Plan that provides its taxpayers with state tax and other benefits not available through this plan.
Notice: Accounts established under Learning Quest and their earnings are neither insured nor guaranteed by the State of Kansas, the Kansas State Treasurer or American Century Investments.
Administered by Kansas State Treasurer
Managed by American Century Investment Management, Inc.