EGTRRA provisions affecting PFP.

• Jurisdiction: United States
• Author: Grant, Randi
• Date: 01 January 2002

A financial planner's mission is to help clients identify and achieve their goals. This includes tax planning, retirement planning, estate planning and risk management. Last summer, Congress enacted the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), which gave financial planners several new options and possibilities to consider for their clients. While the EGTRRA repeals certain key provisions in 2010, financial planners should apply

the Code as it reads today. Experience indicates that the only thing certain about tax legislation is uncertainty. (Congress is already considering newer tax legislation, which might be enacted before this column appears.) Given this, diligent monitoring is essential to good financial planning. Planners should review and probably revise all existing financial plans, as significant changes might render existing plans obsolete.

Education Planning

Sec. 529 plans. Qualified tuition plans under Sec. 529 are attracting considerable interest. They are a powerful planning opportunity--plan assets grow tax-free and distributions are tax-free, provided taxpayers use the distributions to pay for qualified higher education expenses. Taxpayers can claim Hope or Lifetime Learning credits for the same year in which they make distributions from Sec. 529 plans, as long as they do not use the distributions for the same expenses for which they claim the credit. The...