Two Exchange Of Assets Per Year For 529s

During this stay-at-home period, you are probably taking time to review your Ohio 529 Plan account. If you’d like to implement some account maintenance, there are tools to help reshape your plan.

After looking at your account, if you would like to move out of an investment option and move the funds to another investment option, you can complete this exchange of assets. According to federal law and 529 guidelines, you can exchange investment options within your 529 college savings plan twice per calendar year.

At the end of 2014, Congress enacted 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 which you want to make an exchange. You will then click on “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. Please remember that according to federal law, you can only make an exchange of assets twice in a calendar year.

The other option is to fill in the exchange form online with the requested information, including 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. Upon completion, you will need to print the filled-in form and mail it to the address listed on the first page.

What About Age-Based Portfolios Exchanges?

Over 60 percent of current Ohio Direct 529 Plan account owners have chosen to save in age-based investment options. For Ohio’s 529 Plan, these options include Advantaged Age-Based Portfolios (AABP) and the Vanguard Ready-Made Age-Based Portfolios. Both portfolios reflect college-savings industry standards of smooth glide paths, which determines the asset allocation mix within an investment option.

An age-based 529 portfolio creates an asset allocation mix based on age bands. When the beneficiary is young, there are more equities found in the portfolio. As the beneficiary grows older, the mix adjusts with each new age band, reducing the amount of equity and increasing the amount of more conservative investments such as fixed-income and cash preservation options.

In the Ohio 529 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 BlackRock 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 since both plans are part of the CollegeAdvantage Program. Even though it is considered an exchange, you will be required to complete the Incoming Rollover form because it is within the same Ohio 529 program for the Advisor Plan.  If you are moving the funds from the Guaranteed Plan to the Direct Plan, you will need to utilize the Guaranteed Withdrawal 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 any 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.

As a reminder, the Customer Service and Operations Team is working with a reduced staff due to COVID-19 directives and our Customer Service Line is not currently available. If you have account-specific questions, please email with your inquiry, as well as a good daytime contact number and the best time of day to reach you. Email inquiries will receive a reply within one (1) business day. The Customer Service Team will make these outbound calls between 8:30 a.m. – 5 p.m. ET on Mondays, Tuesdays, Thursdays and Fridays, and between 8 a.m. – 4:30 p.m. on Wednesdays.

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