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401kid launches web-based 529 and Education Savings Plan product for families
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Author: Administrator Account
Added: 12/03/2003
Type: Summary
Viewed: 1274 time(s)
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 401kid launches web-based 529 and Education Savings Plan product for families
New York, NY December 3 2003--401kid Inc., a Registered Investment Advisor (RIA) and financial software company that manages Education Savings Plans, announced the launch of the first ever web-based 529 plan product, designed to provide a comprehensive set of virtual financial planning tools for families. Dubbed 401kid ESP Wizard, the product is delivered through an ASP (Application Service Provider) model and will be distributed through corporate portals, financial planners, insurance companies, banks and schools, as well as directly to families via the website (www.401kid.com).
Individuals can pay a $29.95 annual subsciption fee for a 401kid Gold Membership, which gives them access through my401kid home pages to user-friendly advisory tools such as a Personalized Report and a 529 Plan Comparison Wizard. "Our purpose in developing 401kid ESP Wizard is to provide families with a clear roadmap for their education financial goals and to understand how these goals fit in to their overall financial plan," says Arman Rousta, Chief Executive Officer of 401kid. "Most families have limited understanding when it comes to evaluating how savings, taxes, financial aid, and other factors impact their education savings strategy. ESP demystifies this process." By providing investor education content, basic analytical tools, and clear action plans, ESP shows users how to initiate or modify their education savings plans to achieve their goals.
With tuition costs rising more than twice as fast as the rate of inflation, parents of newborns are looking at $250,000 for four years at a private college, not including any K-12 private school costs, which currently run about $15,000 per year. No wonder why parents consider education savings to be their second most important financial goal after retirement. Furthermore, despite the wealth of financial information and products in today's marketplace, there have not been any basic, time and cost effective solutions, to the challenges of education financial planning, available to consumers. In fact, according to the CENSUS survey of the International Society of Certified Employee Benefits Specialists (full article at www.ifebp.org), 96% of respondents agreed that "workers want and need financial planning education and advice."
Due to the recent passage of new tax laws, already promising savings vehicles, such as 529 plans and Coverdell Education Savings Accounts, have become even more useful to families; however, the decision-making process has become more complex as financial institutions compete for market share, leaving families confused and employers unsure of how to introduce these plans into their employee benefits program. According to 401kid Advisors, the investment services division of the company, employees of large corporations, that have offices in multiple states, can lose out on millions of dollars if they do not sign up with the most tax-effective 529 plans. To address this issue, 401kid ESP offers a 529 Plan Due Diligence Guide which help companies and families avoid such pitfalls. Companies may integrate ESP into their existing intranets or through a custom portal designed by 401kid, thereby facilitating employee access to relevant financial planning tools while also serving their fiduciary duties. It is too valuable a service for companies not to offer, not to mention its value in attracting and retaining key people. ESP also handles the administrative burden that has kept employers away from 529 plans, by aggregating all plans through one interface. This nullifies the need for benefits directors to deal directly with multiple fund managers.
For families, the interactive Personalized Report is a key tool that guides their learning and planning process. By entering their financial data and savings goals, members receive a complete, custom guide on which 529 plans are best for them considering fees, expenses and tax deductions, how they should allocate their income and assets towards their goals, their eligibility for educational grants, tax credits, and Coverdell ESA, how to optimize financial aid, and how other savings goals, like retirement and buying a house, interrelate to education goals. Initially, Rousta estimates that it takes the average user 15 minutes to execute their client profile online and obtain their customized plan, which may be viewed through web pages or a printable PDF document. 401kid will even send members a bound, color copy of their report if requested, for an extra $10. All personal and financial data is considered to be private and will not be shared with third party companies without the customer's approval. At any time, members may update their profiles or test different strategies, through "What if" statements, such as "What if I rolled my UGMA account over into a 529 plan?" ESP will display the results of such strategies, so that members may make informed decisions. The Personalized Report will reflect strategic modifications immediately.
Financial Advisors, Planners, and Benefits Consultants can license and private lable 401kid ESP Wizard, in order to manage their clients' education savings plans. By integrating the ESP module into their websites or through custom sites, financial planners can instantly connect clients to their 529 plans and Coverdell accounts. Planners may also use the ESP tools to assist corporate clients in setting up education plans within their benefits programs.
Rousta expands upon how the growing 529 plan market has stimulated awareness of the need for overall education financial planning: "It is evident that 529 plans will become a necessary part of almost every American family's education plan. As people are becoming more aware of the complexities of these vehicles, proper investor education and appropriate financial planning tools are an absolute necessity, so as to avoid costly mistakes. For companies, it is not a matter of if they will offer employees an education plan but when. And 401kid ESP Wizard will show them how."
For more information, visit www.401kid.com.
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