2009 Changes to 529 Plans – Throw Me A Lifeline!
Description: A little known secret in the Stimulus Package is that the 529 College Savings Plans have been made a little better with some law changes.
There are two main changes to be aware of, one benefiting those whose children are not yet in college and the other for those whose children are already in college.
- 1. Investments Can Be Changed TWICE in the 2009 Calendar Year: Historically, you could only change the investments once a year but due to the recent market fluctuations, you can now change the investment choices twice a year. This is for money that is already invested but here’s a tip:
If you are contributing money on a recurring basis, you can select that money to go straight into the Money Market fund. From there, you can determine where to allocate that money based on what you think is the best option based on what’s going in the market. Since there are no limits on allocating new money, you can do this with each contribution or wait till a sizable amount is sitting in the money market (greater than $1250) and then make the allocation. - 2. The IRS Has Expanded the Acceptable Expenses That Can Be Paid By the 529: Now, families can also use 529 money for computers and computer technology such as educational software and internet service for students living at home.
By taking advantage of these new provisions, you can more effectively move your money around to be better aligned or prepared for the market’s changes and you can spend the money on more qualified expenses.
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