A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code, which created these types of savings plans in 1996.

If you own a 529 college savings plan, you may have been previously frustrated at the federal rule prohibiting you from making unlimited investment changes within these college accounts. For years, Internal Revenue Service rules prohibited 529 owners from carrying out investment changes more than once in a calendar year. So if in January you moved money between investment options in the 529 account, you were done making changes for the rest of the year.

This particular regulation made little difference to those investors already utilizing a passive investment approach that considered an age-based risk tolerance, diversification and long-term investment objectives. Active investors on the other hand, have historically found the inflexibility associated with this IRS regulation to be problematic when attempting to move between investments or time the market in an upswing or downturn. Some investors chafed at the once-per-year restriction and some 529 trade groups such as the College Savings Plans Network, which is an affiliate of the National Association of State Treasurers, campaigned against the restriction. The New Year, however, ushered in the regulation change when President Barack Obama signed legislation late last year that will allow investors to make investment changes within 529 accounts twice in a calendar year.

Owners of 529 college plans should know that another restrictive rule governing these college accounts hasn't changed. An investor can still only make one tax-free rollover from a 529 account into another one within a 12-month period. If you get into a bind and decide you need to make an investment move after exhausting your two free moves, there is still something you can do. You can change the account’s beneficiary and then you can pick new investments. As an example, let’s say the parent has already made two changes to a 529 for his son, who was the original beneficiary. The parent can change the beneficiary to a daughter or another son and enjoy investment flexibility again. You can later change the beneficiary back to the original recipient.

As a practical matter, investors shouldn't make frequent changes to their 529 investment line-up. This is especially true if your money is already invested in the popular age-based investment options that automatically grow more conservative as a child ages. A periodic review of an existing 529 is a prudent measure in any market, however, with new relevant legislation in place, now may be an opportune time to discuss college planning options with an investment professional.

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