The Markets October 13, 2010

Year-End Setting is Prime for Planning

iShares said today that the current tax environment, combined with the characteristics of 529 college savings plans, can be most useful during this time of year. 
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Stephen Jobe, director of 529 programs at iShares, said in a news release that, “With the country in full gear preparing for healthcare reform and additional tax changes under consideration, this year-end season will be a crucial one for tax strategy.”  He added, “529 plans were created specifically to make saving for higher education easier, and they come equipped with important tax incentives that CPAs and advisers can maximize during their planning process.”

iShares pointed out several tax incentives that should not be forgotten about for those thinking about starting a 529 plan:

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  • Capitalize on accelerated gifting: Using a unique provision for accelerated gifting, individual investors can immediately reduce their taxable estate by $65,000 per beneficiary ($130,000 for a married couple) in a single year without losing control of those assets.
  • Liquidate UGMAs with gains now before taxes increase: Custodial accounts intended for higher education expenses may gain more through a conversion to a 529 plan, where assets have the potential to grow tax-deferred and qualified education expense withdrawals are free from federal tax.
  • Make the most out of RMDs: Discretionary required minimum distributions may earn more by reinvesting in a 529 plan, where account owners can also establish a financial legacy for future generations.
  • Maximize the earnings of Trust assets: Because many Trusts hold investments which put them in the highest tax bracket, those Trusts may benefit from reinvesting a portion of the assets – specified for higher education – in a 529 plan.
Deals & People October 13, 2010

Derivative Consultancy Formed in New York

Joyce Frost and Frank Iacono, former executives with Morgan Stanley, along with Chris Frost, former Managing Director at Societe Generale, have formed Riverside Risk Advisors LLC.
Reported by

A news release said the New York company’s formation is in response to demand for independent risk assessment, structuring, pricing and execution advice for complex derivative and structured product transactions.

The company said Riverside’s clients include derivative end-users such as corporations, private equity firms, real estate developers, and project sponsors.  Riverside also advises investors evaluating structured credit opportunities and financial firms winding down or restructuring legacy businesses.

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“The Dodd-Frank Act creates an effective mandate that some end-users seek independent advice for derivative transactions,” said Iacono, in the news release. “We expect, however, that even where a statutory or regulatory requirement is not created, outside advice with respect to suitability and fairness, from professionals with relevant transaction experience, will become the new best-practices standard.”

Prior to co-founding Riverside, Chris Frost served as Managing Director at Societe Generale in New York where he ran the corporate interest rate derivatives and foreign exchange sales business for the Americas for fourteen years.  Iacono was formerly a Managing Director at Morgan Stanley and CEO of Cournot Financial Products LLC, a AAA-rated Credit Derivatives Product Company sponsored by Morgan Stanley.  Joyce Frost has over 25 years experience in interest rate, currency and credit derivatives, most recently with Morgan Stanley, but also including senior positions at Chase Manhattan Bank and Sumitomo Bank Capital Markets.

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