MARCH 2020
Khaas Baat : A Publication for Indian Americans in Florida


For College Savings, 529 Plans Are Hard to Beat


Raising kids is hard enough, so why not make things easier for yourself when it comes to saving for college? Ideally, you want a savings vehicle that doesn't impose arbitrary income limits on eligibility; lets you contribute a little or a lot, depending on what else happens to be going on financially in your life at the moment; lets you set up automatic, recurring contributions from your checking account so you can put your savings effort on autopilot; and offers the potential to stay ahead of college inflation, which has been averaging 3 to 4 percent per year. (1) Oh, and some tax benefits would be really nice, too, so all your available dollars can go to college and not Uncle Sam. Can you find all of these things in one college savings option? Yes, you can: in a 529 plan.

529 college savings plans offer a unique combination of features that are hard to beat when it comes to saving for college, so it's no surprise why assets in these plans have grown steadily since their creation over 20 years ago.

Eligibility. People of all income levels can contribute to a 529 plan — there are no restrictions based on income (unlike Coverdell accounts, U.S. savings bonds, and Roth IRAs).

Ease of opening and managing account. It's relatively easy to open a 529 account, set up automatic monthly contributions, and manage your account online. For example, you can increase or decrease the amount and frequency of your contributions (e.g., monthly, quarterly), change the beneficiary, change your investment options, and track your investment returns and overall progress online with the click of a mouse.

Contributions. 529 plans have high lifetime contribution limits, generally $350,000 and up. (529 plans are offered by individual states, and the exact limit depends on the state.) Also, 529 plans offer a unique gifting feature that allows lump-sum gifts up to five times the annual gift tax exclusion — in 2020, this amount is up to $75,000 for individual gifts and up to $150,000 for joint gifts — with the potential to avoid gift tax if certain requirements are met. This can be a very useful estate planning tool for grandparents who want to help pay for their grandchildren's college education in a tax-efficient manner.

Tax benefits. The main benefit of 529 plans is the tax treatment of contributions. First, as you save money in a 529 college savings plan (hopefully every month!), any earnings are tax deferred, which means you don't pay taxes on the earnings each year as you would with a regular investment account. Then, at college time, any funds used to pay the beneficiary's qualified education expenses — including tuition, fees, room, board, books, and a computer — are completely tax-free at the federal level. This means every dollar is available for college. States generally follow this tax treatment, and many states also offer an income tax deduction for 529 plan contributions.

But 529 plans have some potential drawbacks.

Tax implications for funds not used for qualified expenses. If you use 529 plans funds for any reason other than the beneficiary's qualified education expenses, earnings are subject to income tax (at your rate) and a 10 percent federal penalty tax.

Restricted ability to change investment options on existing contributions. When you open a 529 college savings plan account, you're limited to the investment options offered by the plan. Most plans offer a range of static and age-based portfolios (where the underlying investments automatically become more conservative as the beneficiary gets closer to college) with different levels of risk, fees, and management objectives. If you're unhappy with the market performance of the option(s) you've chosen, you can generally change the investment options for your future contributions at any time. But under federal law, you can change the options for your existing contributions only twice per year. This rule may restrict your ability to respond to changing market conditions, so you'll need to consider any investment changes carefully.

Getting started
529 college savings plans are offered by individual states (but managed by financial institutions selected by the state), and you can join any state's plan. To open an account, select a plan and complete an application, where you will name an account owner (typically a parent or grandparent) and beneficiary (there can be only one); choose your investment options; and set up automatic contributions if you choose. You are then ready to go. It's common to open an account with your own state's 529 plan, but there may be reasons to consider another state's plan; for example, the reputation of the financial institution managing the plan, the plan's investment options, historical investment performance, fees, customer service, website usability, and so on. You can research state plans at

(1) College Board, Trends in College Pricing, 2014-2018

Securities and Investment Advisory services offered through SagePoint Financial, Inc., member FINRA/SIPC and a registered investment advisor. Fixed and/or Traditional Insurance Services may be offered through Capital Insurance & Asset Protection LLC, which is not affiliated with SagePoint Financial or registered as a broker-dealer or investment advisor.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

Haren Mehta, managing partner of Capital Insurance & Asset Protection in Tampa, can be reached at (813) 679-5204 or email


Psychological Safety in a Team Environment

Karyn Mathura-Arthur

By Dr. Karyn

For effective and efficient teams to successfully operate in today’s competitive business environment, there must be common and collective goals established by all members. Setting up specific team performance activities to obtain a desired objective of goal setting is extremely important and should include using the skills of every team member allowing them to bring their diverse views to the table. However, to do so, it is necessary to create a safe space for interpersonal risk through psychological safety. The idea is based on team members not being punished or called out for ideas, opinions, concerns or mistakes allows for this.

One of the best ways to develop a psychologically safe environment for team members is to encourage everyone to have an open mind. Asking the right questions is also tantamount to getting the team to open up. The process or exercise of actually doing it is what is most important. Creating that inner assurance that a team members contribution valued allows the tough conversations to happen.

An organization with no psychological safety directly affects team performance and ultimately, the bottom line. This usually exists where there are rigid reporting lines that force team members to bite their tongues instead of speaking up and pitching ideas that are different than the leadership. It is a fear-based, favouritism encouraged environment. Volkswagen is an example of this coming to light with the emissions scandal that cost the company because their employees did not speak up. Now the company is working diligently to change that environment.

So how does a leader create a psychologically safe team? “I have found that acting as a coach and not a boss, helps individuals develop to their full potential,” said Suhas Apte, past president of TiE Tampa.

If a project is already in the works, ensure that the focus is on learning and not just executing. Encourage each member of the team by providing the assurance that his or her contribution, either by asking questions, giving an opinion or taking action on decisions would not be seen as unprofessional, insane or irrelevant. Members must know that their viewpoints would not be used against them.

You've heard of high-performance workplaces, but how do they become "high-performance"? Physiological safety has also been found to help in the development of each team member. And all employees have a psychological need to learn and grow as human beings. Many leaders fear that they will invest in their employees' development only to see them walk out the door anyway. This does happen – but the best way to keep it from happening is to secure people's psychological commitment through an employee engagement strategy.

Psychological fears of what the outcome of the ideas, opinions and contributions will be has kept all of us including myself in a world of our own and this limits what a team can achieve. As leaders we should all embrace psychological safety in every organization. Remember that we as individuals “have not been given the spirit of fear; but of power, and of love, and of a sound mind” (2Timothy 1:7). Safety has always been a better option than fear and I hope all managers’ work at keeping your team members psychologically safe. Your success and the success of your organization depends on it!

Dr. Karyn Mathura-Arthur is an agile implementation leader with experience in Operational Excellence, Continuous Process Improvement, Business Transformation, Process Engineering and Organizational Change Management across multiple industries (banking, insurance, healthcare, telecom, government, retail, etc.). For comments and suggestions, email

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