State of the Union

[Chisoxfn]

I mean, if that's the case, that's moronic. That's hurting the middle class, not just the rich. My wife and I were about to start looking into this for our son. But if there's no tax advantage, there's no point.

I had been slacking off for my daughters (have been putting the money aside, just hadn't yet put it in the fund) but this inspired me today to finally transfer what i had put aside into a Utah 529 plan (CA doesn't have any tax benefit and Utah is widely regarded as one of the top 529 plans from a cost & investment perspective). Figure with my son about to come into the world, better get my daughter's set-up. One thing to remember is if you do set one up, make sure all contributions go into it from the parental accounts (vs. a grandparent setting something up independent). The parental ones won't count as assets to the child where one's set up by grandparents would (for financial aid applications, etc).

 

When it comes to tax deferred savings, I always try to maximize it to the extent possible. And yeah, totally hurts the middle class. I realize more people in the upper classes have money to set aside but middle class can also set aside funds, etc, and take advantage of it (i'm a stingy accountant so I try to do anything I can to legally minimize $'s I give to uncle sam). It is free money and I like free (presuming you get in one of the low cost plans and have done your homework on that...some state plans are pretty bad and every state has its own unique rules as to whether you get a state income benefit). Either way, earlier you start, the more time for returns to compound and the smaller the chunk you need to put away to help your kids.

 

Same reason people should always take advantage of the HSA / FSA (depending on whether they are on high deductible plan or normal plan).

[Reddy]

What do you mean more specific? What drugs are you on? If you think Obama will be considered on of the greatest Presidents in our history, you must be on something.

 

He's failed miserably at the vast majority of campaign promises he's given in the two campaigns (ending 99% of the Bush war on terror policies, closing Gitmo, going after the wealthy/Wall Street, blah blah). His one crowning achievement - Obamacare - was an embarrassment for 6 months and still hasn't delivered the 30 million uninsured's it was supposed to. A whopping 5% drop in the number of uninsured's. I'm sure the cost the government is spending/has spent will be TOTALLY worth that.

 

Yes, the economy is improving, though i'm always dubious of any claim that a single person pushing policy can hurt or help the economy. What specifically are you pointing to that he pushed for and got that led to the recovery? I don't think he did anything, I think the US just happened to be the most secure out of any country in the world and we're looking better because of it (falling oil prices also helped quite a bit).

 

I don't think he gets credit for OBL. I think any president would have ok'd that mission.

 

You're giving him credit for promises like free community college (I highly doubt he was the first to say this is a good idea) or any of his other "middle class economics" promises that will most likely not happen. I mean, the fact that you point to approval of SOTU speeches as evidence that people are behind him and not the GOP is just laughable. He's promising people the moon. Of course they'll be happy. Let's see how happy they'll be when none of it happens.

 

Also, IBR plans have been around for a long time, at least since i've been paying back my loans (2004). I think his promise at one point to forgive all loans after 25 years never passed. So i'm not sure what you're referring to here.

 

I'm on the drug called "facts" and yes, sadly it's true that facts tend to skew left.

 

- Obama care was gutted BECAUSE of compromise with Repubs, in order to get it passed. The original legislation was a much, much better program. And the point I was making is not that it's perfect, but that it's the first step in creating something that is much better. Sadly the GOP doesn't WANT to make it better, because a better health care plan isn't what their lobbyists want.

 

- If you'll recall, when Obama came into office he continued with the bailouts and put forth a stimulus package that the GOP railed against. Well... turns out... it worked.

 

- Lol @ OBL, you would've given Bush all the credit in the world if he'd gotten him... although I guess Bush did get a little distracted by creating a couple fake wars...

 

- His promises are BRILLIANT, because when none of it happens, who's fault will it be? Not his. He pushed for the moon! The GOP congress just didn't wanna give it to him, and that will reflect badly on them in 2016.

 

- And IBR plans started with Obama, and the 25 year forgiveness IS in effect. It did pass. FYI.

 

[Reddy]

Reddy...I think you are delusional at this point. Too hard to see what the legacy would be down the road but I don't think there are a lot of people who today would call him one of the "great" presidents. If you go off of historical approval ratings, there is nothing to indicate he is great. Hard to predict what the view of him will be 20+ years from now but to be able to make a claim that he is in fact going to be regarded that way is pretty crazy.

 

Nah, not delusional. Y'all conveniently forget how much I don't like Obama. I hate the way approached his presidency for the first 6 years, with no backbone, no spine, and not being willing to stand up to the GOP that was just stonewalling him. In the first couple years, the reason MORE didn't get done, is that he was TRYING to reach across the isle - foolishly - and the GOP was just shaking their heads at every single policy proposal.

 

He handled all that horribly. I hate his viewpoint on the NSA, on Snowden, on drones. Much of his foreign policy is suspect. He's an old-school conservative dressed in blue. But all that said, his approval ratings right now are MUCH higher than Bush's ratings at this point in his presidency, and he's working with the single most obstructionist congress in the history of America. And I have a feeling he's going to go hard these next couple years with his new "IDGAF" attitude, and, like I said, it's gonna look good on him, because the onus will be on this ridiculous congress to GET THINGS DONE. I mean, where is THEIR approval rating compared to Obama's?

 

I may be wrong, but we'll see.

[Chisoxfn]

I mean, if that's the case, that's moronic. That's hurting the middle class, not just the rich. My wife and I were about to start looking into this for our son. But if there's no tax advantage, there's no point.

Jenks, I don't know if you guys have daycare or not, but if you do, I highly recommend taking care of a dependent care FSA (maximum of $5K per family). Works similar to a 401K / IRA / FSA, where basically you are using pre tax dollars vs. after tax dollars. So you would save 5K (presuming you have daycare costs of at least that) X your effective tax rate. Not a ton (considering how expensive daycare is) but as far as I'm concerned, every $ helps.

[Jenksismyhero]

I'm on the drug called "facts" and yes, sadly it's true that facts tend to skew left.

 

- Obama care was gutted BECAUSE of compromise with Repubs, in order to get it passed. The original legislation was a much, much better program. And the point I was making is not that it's perfect, but that it's the first step in creating something that is much better. Sadly the GOP doesn't WANT to make it better, because a better health care plan isn't what their lobbyists want.

 

For a small minority of people. It did nothing to lower costs for the remaining 80% of the country that aren't using it. We'll see if the promises that it will effect the entire system ever comes true (not likely).

 

- If you'll recall, when Obama came into office he continued with the bailouts and put forth a stimulus package that the GOP railed against. Well... turns out... it worked.

 

If the GOP/Bush implemented them, they weren't against them, at least not all of them...

 

- Lol @ OBL, you would've given Bush all the credit in the world if he'd gotten him... although I guess Bush did get a little distracted by creating a couple fake wars...

 

I wouldn't have, actually, because again that's enemy #1 and any person in that chair is going to make the decision to go after them. And oddly the fake wars sorta caused the entire thing to happen....without the war he wouldn't have been forced to live in a suburb of Pakistan and is probably living it up in a heavily defended mountain fortress somewhere.

 

- His promises are BRILLIANT, because when none of it happens, who's fault will it be? Not his. He pushed for the moon! The GOP congress just didn't wanna give it to him, and that will reflect badly on them in 2016.

 

I know you're young, but jesus go read some books or the internet on SOTU speeches. Obama did nothing new. It was not "brilliant." Every president when speaking to the American people promises the moon. That's how they get to office in the first place.

 

- And IBR plans started with Obama, and the 25 year forgiveness IS in effect. It did pass. FYI.

 

An income dependent repayment options has been around for years. I'm not sure why you think Obama did that. Maybe he tweaked it some, but he didn't create it. Gore invented the internet though right?

 

And you better read the fine print on that 25 year clause. You're paying taxes on what's forgiven after 25 years. And you have to make so many qualified payments. And if you end up making a decent chunk of change later in the term of the loan, you're potentially going to get hit with some high interest if you don't meet the criteria. It's designed for people in public service who will never make a lot of money and will always be unable to afford the standard or graduated repayment figure.

[Jenksismyhero]

Jenks, I don't know if you guys have daycare or not, but if you do, I highly recommend taking care of a dependent care FSA (maximum of $5K per family). Works similar to a 401K / IRA / FSA, where basically you are using pre tax dollars vs. after tax dollars. So you would save 5K (presuming you have daycare costs of at least that) X your effective tax rate. Not a ton (considering how expensive daycare is) but as far as I'm concerned, every $ helps.

 

I looked into this when we started him in our daycare, but isn't the catch that you can't then also claim the child care credit?

[Jenksismyhero]

Nah, not delusional. Y'all conveniently forget how much I don't like Obama. I hate the way approached his presidency for the first 6 years, with no backbone, no spine, and not being willing to stand up to the GOP that was just stonewalling him. In the first couple years, the reason MORE didn't get done, is that he was TRYING to reach across the isle - foolishly - and the GOP was just shaking their heads at every single policy proposal.

 

He handled all that horribly. I hate his viewpoint on the NSA, on Snowden, on drones. Much of his foreign policy is suspect. He's an old-school conservative dressed in blue. But all that said, his approval ratings right now are MUCH higher than Bush's ratings at this point in his presidency, and he's working with the single most obstructionist congress in the history of America. And I have a feeling he's going to go hard these next couple years with his new "IDGAF" attitude, and, like I said, it's gonna look good on him, because the onus will be on this ridiculous congress to GET THINGS DONE. I mean, where is THEIR approval rating compared to Obama's?

 

I may be wrong, but we'll see.

 

God, you are such an easy sell if that speech is all that it took.

[StrangeSox]

I'm on the drug called "facts" and yes, sadly it's true that facts tend to skew left.

 

- Obama care was gutted BECAUSE of compromise with Repubs, in order to get it passed. The original legislation was a much, much better program. And the point I was making is not that it's perfect, but that it's the first step in creating something that is much better. Sadly the GOP doesn't WANT to make it better, because a better health care plan isn't what their lobbyists want.

 

The original house bill was more expansive, but the House bill never stood a chance of getting all 60 Democratic votes in the Senate.

 

 

[StrangeSox]

For a small minority of people. It did nothing to lower costs for the remaining 80% of the country that aren't using it. We'll see if the promises that it will effect the entire system ever comes true (not likely).

 

Correlation versus causation, but the growth in all plans, not just Exchange plans, has been slowing since the bill started kicking in. Plus there's a lot of things that effect lots of people who had employer-based coverage before such as allowing children to stay on a plan until 26.

[Jenksismyhero]

Correlation versus causation, but the growth in all plans, not just Exchange plans, has been slowing since the bill started kicking in. Plus there's a lot of things that effect lots of people who had employer-based coverage before such as allowing children to stay on a plan until 26.

 

Yeah there were some clauses in there I agreed with, extended the coverage age, pre-existing conditions, etc. but that doesn't mean the whole law is good. And if it does fail in 10 years you all obviously have your built in excuse: it wasn't expansive enough to actually work!

[StrangeSox]

That's a subscriber only article, what's the jist of it? Why does he want to cut those benefits? Isn't it a good thing that people set aside money for college tax free?

 

It's apparently part of a larger plan to simplify the numerous college credits/deductions/incentives that are out there. The money saved from this change would be used to expand the American Opportunity Tax Credit, which provides a tax credit of up to $2,500. The growth inside of a 529 would still be tax-deferred, but you would pay taxes upon disbursement so there's still some incentive to use the plan.

 

Per an "administration official," the 80% of the current 529 plan benefits go to households making $250k or more. You can eliminate that benefit and shift it to something that more heavily favors the middle class, like the AOTC seems to do. You're just shifting the incentives/federal funding from one type of program to another that might be better at what you're trying to accomplish.

[Reddy]

God, you are such an easy sell if that speech is all that it took.

 

It's not the speech, it's everything he's done recently, from Cuba, to Immigration, to these new policies he's outlining.

 

[Reddy]

Yeah there were some clauses in there I agreed with, extended the coverage age, pre-existing conditions, etc. but that doesn't mean the whole law is good. And if it does fail in 10 years you all obviously have your built in excuse: it wasn't expansive enough to actually work!

 

... I mean... at least that shows we're consistent. We've been arguing that point since its inception.

 

[pettie4sox]

Correlation versus causation, but the growth in all plans, not just Exchange plans, has been slowing since the bill started kicking in. Plus there's a lot of things that effect lots of people who had employer-based coverage before such as allowing children to stay on a plan until 26.

 

Yeah that was a nice touch. I was able to get a bunch of procedures done before I was kicked off again mind you because it was originally 22-23.

[StrangeSox]

Yeah there were some clauses in there I agreed with, extended the coverage age, pre-existing conditions, etc. but that doesn't mean the whole law is good. And if it does fail in 10 years you all obviously have your built in excuse: it wasn't expansive enough to actually work!

It's not the program I ultimately want and it fails right off the bat at accomplishing what I'd like (truly universal healthcare access), but it isn't designed to do that. I don't expect the ACA reforms to fail, and if their are failures I don't think a "not expansive enough" argument would really even make sense. It's a different argument from say the boosting the recovery with strong fiscal policy argument because that's simply an $X dollars argument.

[Reddy]

I know you're young, but jesus go read some books or the internet on SOTU speeches. Obama did nothing new. It was not "brilliant." Every president when speaking to the American people promises the moon. That's how they get to office in the first place.

 

I'm 28. I'm not that young. I live in the same real world as the rest of you.

 

It's brilliant given today's context, the context of 2016, and the fact that I didn't really expect it out of him.

 

He keeps doing what he's doing, and it's not just the Presidency we'll have locked up in '16, but we'll make gains in congress as well.

Edited January 23, 2015 by Reddy

[StrangeSox]

but we'll make gains in congress as well.

That has more to do with presidential/non-presidential election years and what Senate seats will be up than anything.

[Jenksismyhero]

It's apparently part of a larger plan to simplify the numerous college credits/deductions/incentives that are out there. The money saved from this change would be used to expand the American Opportunity Tax Credit, which provides a tax credit of up to $2,500. The growth inside of a 529 would still be tax-deferred, but you would pay taxes upon disbursement so there's still some incentive to use the plan.

 

Per an "administration official," the 80% of the current 529 plan benefits go to households making $250k or more. You can eliminate that benefit and shift it to something that more heavily favors the middle class, like the AOTC seems to do. You're just shifting the incentives/federal funding from one type of program to another that might be better at what you're trying to accomplish.

 

I would hope the earnings in a 529 plan for 15-18 years is more than a $2,500 tax credit!

[ptatc]

I mean, if that's the case, that's moronic. That's hurting the middle class, not just the rich. My wife and I were about to start looking into this for our son. But if there's no tax advantage, there's no point.

Off topic but if you looking at a college saving plan I would suggest the College Illinois plan. It gives you the current tuition price for when they go to college. You pay over 10 years and it's a great benefit. We paid 43,000 over 10 years for my daughter and she will go to an out of state school and they are paying 19,000 a year for her during this year.

[Reddy]

That has more to do with presidential/non-presidential election years and what Senate seats will be up than anything.

 

Well right. The odds of winning seats back are already high for those reasons. Higher turnout = more blue. But he's got an opportunity to keep rallying a base that maaaay be less than enthusiastic about Hillary (I'm looking at minority voters specifically). The better Obama does this last couple years at fighting the GOP, the better we'll do in '16, IMO. That's what people have wanted from him all along.

[StrangeSox]

I would hope the earnings in a 529 plan for 15-18 years is more than a $2,500 tax credit!

It would be interesting to see an actual breakdown of it, but really it's all part of a larger "college benefits reform" proposal. I'd also imagine that, for most middle-class people, the actual average account balances would be just as low if not lower than 401(k) average balances, so $10k total in tax credits ($2.5k x 4) might actually be worth far more than the tax on capital gains. And it'd still be tax-deferred, so your money would grow tax-free for 15-18 years.

[Jenksismyhero]

I'm 28. I'm not that young. I live in the same real world as the rest of you.

 

It's brilliant given today's context, the context of 2016, and the fact that I didn't really expect it out of him.

 

He keeps doing what he's doing, and it's not just the Presidency we'll have locked up in '16, but we'll make gains in congress as well.

 

I mean I love the positivity here, but the democrats just got smoked in the last election. The american people are clearly tired of progressive policies. Why do you think anything in these next 2 years is going to change that? If Obama gets any of these policies passed, which is a dubious claim, they are things that the majority of people want and the GOP can claim partial credit for it.

[StrangeSox]

Off topic but if you looking at a college saving plan I would suggest the College Illinois plan. It gives you the current tuition price for when they go to college. You pay over 10 years and it's a great benefit. We paid 43,000 over 10 years for my daughter and she will go to an out of state school and they are paying 19,000 a year for her during this year.

My boss just locked this in for his son.

[Reddy]

I mean I love the positivity here, but the democrats just got smoked in the last election. The american people are clearly tired of progressive policies. Why do you think anything in these next 2 years is going to change that? If Obama gets any of these policies passed, which is a dubious claim, they are things that the majority of people want and the GOP can claim partial credit for it.

 

You really think the dems got smoked? The underlying numbers based on voter turnout were TERRIBLE for the GOP going forward.

 

[StrangeSox]

I mean I love the positivity here, but the democrats just got smoked in the last election.

 

Yeah, and there's two important reasons for that. Mid-year elections are lower turnout and stronger for Republicans, and there was the huge wave of Democrats elected in 2008 coming up in the Senate. They had a ton of seats to defend while the Republicans only had a couple that could even be considered contestable. That won't hold true in 2016. Republicans might still hold both houses of Congress, but they're almost guaranteed to lose seats (short of some catastrophic, unexpected event or something).