Survey Shows 91% Seek More Investment Flexibility in 529 Plans

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Most 529 plan investors would like to see the current rule of one investment change per year become more flexible, according to an online poll at Savingforcollege.com, the leading independent resource and authority on 529 plans.

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Providing greater investment flexibility would remove one of the biggest objections I hear from people about using 529 plans.

When visitors to college-savings plan website Savingforcollege.com were asked how many investment changes should be allowed each year in a 529 plan, more than 90% indicated that the current limit of one change in any calendar year is insufficient.

Thirty-eight percent of respondents indicated that they would like to see four changes allowed each year, while the same percentage felt there should be no limit at all on the number of investment changes.

Fifteen percent indicated they would be satisfied with permission for two changes in their investment selections in a year, a situation the IRS temporarily allowed in 2009 due to the unstable condition of the financial markets at the time. In 2010, the rule reverted to one change per year, a restriction that only seven percent of poll respondents felt is appropriate.

Legislation has been introduced into Congress that would increase the permitted number of investment changes to four times in a year. "I hope it eventually passes," says Savingforcollege.com founder Joe Hurley. "Providing greater investment flexibility would remove one of the biggest objections I hear from people about using 529 plans."

Hurley notes that 529 account owners can often bypass the limit simply by changing the beneficiary of the account to another sibling. Investment selections that are changed at the same time as a change in the beneficiary are not considered in the once-per-year limitation.

Online poll results are based on responses received from 110 website visitors through August 28, 2012.

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Marie Osypian
JFH Innovative LLC
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