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New Rule for 529 Plan Investors
Jun 01, 2009

Under federal law, 529 college savings plans are permitted (but not required) to allow investors to change the investment options on their existing contributions once per calendar year. (This is different than changing investment options on future contributions, which most plans allow at any time.) Industry observers have criticized this "once per year" rule as too inflexible, especially in a down market like 2008.

The IRS has recently published a notice addressing this issue. For 2009, according to the IRS, 529 college savings plans may allow investors to change the investment options on their existing contributions twice per year instead of once per year. Check with your 529 plan to see if it offers this new investment flexibility before you make any changes.

Also, keep in mind that most 529 plans allow you to change the investment options on your existing contributions whenever you change the beneficiary of the account.

Prepared by Forefield, Inc. Copyright 2009 Forefield Inc.

 
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