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When you set up your child’s 529 plan, you selected investment options in which to place your college savings. Now that some time has passed, you’ve done additional research and would like to change your 529 investment strategy. Can you do it? Yes, you can.
At the end of 2014, Congress passed a bill, which the president signed, that made legislative changes to Internal Revenue Code (IRC) Section 529. The new provision allows 529 account owners to make two exchanges of assets in an account from one investment option to another investment option in a calendar year. Previously, 529 account owners were limited to only one exchange among investment options per calendar year.
How To Make An Exchange In Ohio’s 529 Plan
You can make these exchanges to your college savings account with Ohio’s 529 Plan, CollegeAdvantage. It’s simple; log-in to your Direct Account(s) and select the account in wish you want to make an exchange. You will then select the link that says “Change Investment Options.” There will be a link on this page called “Exchange Now.” You will select this option and follow the directions within the system to process the exchange. This is the quickest and easiest way to process the exchange.
The other option is to open exchange form online, mark from which current CollegeAdvantage Direct 529 plan investment option you’d like to exchange to another option. You can select all of the funds within an investment option to be exchanged or just a percentage of it.
What About Age-Based Portfolios Exchanges?
In the CollegeAdvantage ready-made, age-based portfolios, assets will automatically exchange from one age band to another, as the beneficiary ages. This will not be considered an exchange and will not count against the two exchanges per calendar year limit.
What About An Exchange Of Assets From An Advisor Plan To A Direct Plan?
If you have a CollegeAdvantage Guaranteed 529 Plan or a CollegeAdvantage 529 Advisor Plan, and you choose to transfer the assets to the CollegeAdvantage Direct 529 Plan, it is considered an exchange of assets, not a rollover. Therefore, it will be subject to the twice per calendar year limitation placed on exchanges by IRS rules governing 529 plans since both plans are part of the CollegeAdvantage Program. Even though it is considered an exchange because it is within the same program in Ohio, you will be required to complete the Incoming Rollover form.
What If You’re Changing The Account Beneficiary?
If you’re changing the beneficiary of your Ohio 529 plan to another member of the family — by blood, marriage, or adoption — then you can place those funds for the new beneficiary in different investment options. This will not be counted as an investment exchange for the purpose of the two exchanges per year for the same beneficiary. Why? In order to process the transfer, the original 529 plan’s assets must be liquidated and the funds will then be invested according to your new investment option selections.
What Is The Difference Between An Exchange And Allocation Exchange?
An exchange is a transference of current 529 funds from one investment option to another. An asset allocation is a change to future 529 contributions. These instructions for future deposits may be changed at any time online or by mailing in the form to the address listed on it.
Have more questions? Call our Customer Service Department from 8:30 a.m. – 6 p.m. EST Monday-Friday at 1-800-AFFORD-IT (1-800-233-6734). Already have an account and would like to make some changes? Log in to your Direct 529 Plan account to increase automatic deposits or payroll deduction contribution amount, update information, or perform account maintenance. And remember, 529 college savings plan is an excellent alternative to student loan debt. CollegeAdvantage is your plan, your way.
Posted on July 26, 2017