Friday, November 20, 2009

529 Plan Losses

Today, Oregon obtained a $20 million settlement from Oppenheimer on the $36.2 million loss of their 529 Plan participants invested in the supposedly conservative Core Bond Fund, which went south in 2008 because it was heavily invested in Lehman bonds and mortgage derivatives.  In Illinois, the loss to 529 Plan participants was $85 million but I can find nothing that Illinois has received a settlement.  The Illinois Treasurer was one of the first state officials to accuse Oppenheimer of improper investing practices and joined with other states, including Oregon, to seek restitution.  What is the status?

We have had a 529 Plan representative on our show representing the Illinois Treasurer in the past.  I always find any retirement or 529 Plan, etc., which does not provide information on the underlying assets of investments unacceptable.  Assets of the a fund are one of the key factors I look at in choosing funds for clients.

Bottom line, as I have said on numerous occasions, your first priority is to funding your retirement before funding an educational fund or buying long term care policies.  But, then, that is why retirement planning is an individualized process involving when that individual will need money, where it will come from, and how to avoid running out of money in retirement while maintaining a desirable quality of life.

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