Weekly War of Words: Financial advisers and college savings accounts

President Obama used his weekly address on Saturday to explain why he called on the Department of Labor to update rules requiring financial advisers to put their clients’ best interest before their own profits.

"Six years after the crisis that shook a lot of people’s faith in a secure retirement, our economy is steadily growing.  Last year was the best year for job growth since the 1990s.  All told, over the past five years, the private sector has added nearly 12 million new jobs.  And since I took office, the stock market has more than doubled, replenishing the 401(k)s of millions of families.

"But while we’ve come a long way, we’ve got more work to do to make sure that our recovery reaches more Americans, not just those at the top.  That’s what middle-class economics is all about—the idea that this country does best when everyone gets their fair shot, everybody does their fair share, and everyone plays by the same set of rules.

"That last part—making sure everyone plays by the same set of rules—is why we passed historic Wall Street Reform and a Credit Card Bill of Rights.   It’s why we created a new consumer watchdog agency.  And it’s why we’re taking new action to protect hardworking families’ retirement security. If you’re working hard and putting away money, you should have the peace of mind that the financial advice you’re getting is sound and that your investments are protected," Obama said.

[youtube http://www.youtube.com/watch?v=BsMUv6-FxPg]

In this week's Republican Address, Rep. Jim Renacci (R-OH) calls on President Obama to back the bipartisan college savings plan (529) passed this week by the House. These plans empower families to set up accounts for their children which can then be used - tax free - for a variety of education-related expenses.

"As an accountant, I’ve seen countless parents struggle with putting away money for their kids’ tuition. You know how it is: you want to make sure they have it better than you do. But at a time when the cost of just about everything is going up and incomes are barely moving, that job’s only gotten harder.

"So last month, when President Obama proposed taxing 529 plans, people were understandably outraged.

"Why would we make saving for college even harder? We talk all the time about rewarding people who work hard and play by the rules – well, that’s what 529 plans are. They empower families to set up accounts for their children – right from when they’re born – and then down the line they can use that money – tax-free – on books, fees, tuition, and room-and-board.

"All told, there are nearly 12 million of these accounts open in all 50 states. That’s up from 1 million accounts in 2001. Why would we stop that growth? So the government can take even more of the money we’ve worked so hard to put away?

"Thankfully, after a public outcry, the president was forced to drop the idea.

"But we can do more. With all the challenges middle-class families are facing right now, we need to make it easier – not harder – to save.

"That’s why the House acted this week to expand and modernize 529 plans. Our plan will do a few simple things.

"First, to adapt to the times, we clarify that computers are qualified expenses under 529 accounts.

"Second, we remove unnecessary paperwork burdens for the administrators of these plans.

"And third, we allow families to re-deposit refunds from colleges without taxes or penalties. This might be useful if something happens and a student has to withdraw early for an illness. It’s just good peace of mind to have," Renacci said.

[youtube http://www.youtube.com/watch?v=JsYUdFkyG7U]