Re: 2009 Planning: Educational Savings Plan

Dear Client:

As a family with young children, you should consider the cost of higher education well in advance of your child's
high school graduation. Two educational savings vehicles allow individuals to save for education on a tax-favored
basis: a qualified tuition program and a Coverdell education savings account. Also, you may be able to exclude
from income a limited amount of bond interest received from qualified U.S. savings bonds in the year you pay
higher education expenses. Parents may also use funds from an individual retirement account or a traditional form
of savings to pay tuition costs. Generally, the payment of higher education costs is supplemented with scholarships,
loans and grants. However, having a viable plan as early as possible in a child's life will make maximum use of a
family's financial resources and may provide some tax benefit.

Section 529 plans. The Tax Code allows states and some educational institutions to offer "529" plans (known for
the section of the Tax Code that governs them). They are also sometimes called qualified tuition programs (QTPs).
They allow you to either prepay or contribute to an account for paying a student's post-secondary education
expenses. An eligible educational institution generally includes colleges, universities, vocational schools or other
post-secondary educational institutions. In addition, distributions from state programs, even to the extent of
earnings, are now entirely tax-free to the extent used for qualified higher education expenses. This tax-free
treatment also has been available for distributions from private college and university programs.

Coverdell education savings accounts. Coverdell education savings accounts (also sometimes called education
IRAs) are similar to IRAs. You can save today for future educational expenses and not just higher educational
expenses. Funds in a Coverdell ESA can also be used for K-12 and related expenses. The maximum annual
Coverdell ESA contribution is $2,000 per beneficiary. Contributions are not deductible by the donor, and
distributions are not included in the beneficiary's income as long as they are used to pay for qualified education
expenses. Earnings accumulate tax-free. Contributions generally must stop when the beneficiary turns age 18
except for individuals with special needs. Parents can maximize benefits, however, by transferring older siblings'
accounts for use by a younger brother, sister or first cousin, thereby maximizing the tax-free growth period. Excess
contributions are subject to an excise tax.

The phase-out amounts of adjusted gross income allowed for a contributor to a Coverdell ESA are generous. The
annual contribution starts to phase out for married couples filing jointly with modified AGI at or above $190,000 and
less than $220,000 and at or above $95,000 and less than $110,000 for single individuals.

Undoubtedly, some of these provisions will be more important to you than others, depending upon your personal
circumstances. If you would like to explore how these opportunities can work for you and have us fully evaluate
your situation, please do not hesitate to call.

Sincerely yours,