We continuously look for ways to expand our services and add more value to our offerings. It saddens us when we must do less simply because of new government regulations and increasing liability. Unfortunately, this is the case with 529 plans. In the future we will no longer be able to assist you with opening, closing, or updating selected 529 accounts. Here is why.
You may have you wondered why Kahler Financial Group can open or update certain of your investment accounts and not others. It all has to do with whether your giving us access to the account (typically your ID and password) gives us too much authority to change addresses, change beneficiaries, or withdraw money. If it does, the SEC calls this “having custody,” which we are prohibited from. This is a consequence of the voluminous regulations passed to protect the public in the aftermath of the Great Recession.
What this means is there are certain accounts (401k’s, annuities, bank accounts, 403b’s, 457’s, 529’s) where we must rely on you to execute trades, open and close the account, or update us with the current balance. We dislike this as much as you do. It’s far easier for us to take the burden for maintaining these accounts off your shoulders rather than having to ask you to do this for us before every review meeting.
We take each account on a case-by-case basis in determining if it gives us too much access. Many companies now have restricted the things that can be done online, so giving us access is okay as we don’t have custody.
The latest victim of this policy are 529 plans, which we currently open for clients. Because we deal with so many different 529 plans in many states, we have decided the liability of running afoul of the custody regulations is too great. Determining whether an account gives us custody is a time-consuming process. When it comes to opening accounts, we also find it impossible to stay abreast of the individual nuances of the 80 or so 529 plans. It’s enough for us to keep up with just TD Ameritrade, much less an obscure 529 plan in a state where we have one client.
Therefore, as of September 15, 2013, we will no longer open 529 accounts for our clients in any state, including SD. We will continue to assist you by recommending the best 529 plans, giving you their contact information, and being available to answer any questions you might have about the process of opening the accounts. We will also continue to electronically update 529 accounts in those states known to comply with limiting online access. And of course, we will continue to help with the planning aspects of saving for college, such as helping you determine how much college will cost in the future and how much savings are needed to meet this goal.
We are sorry we must scale back this service. This is your government protecting you. We hope you understand.