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This week a very important update was announced regarding 529 college savings programs. The IRS effectively removed the longstanding limitation of making changes in investment strategies to once a year. Effective with the 2009 tax year, the new ruling gives investors and their financial advisors the option to make strategic changes twice in a calendar year, including changing the account’s designated beneficiary.

Clearly this change was in response to the great frustration expressed over the past year. While the market swings were reeking havoc on portfolios, there was no way to manage and protect assets in a timely fashion. Subsequently, the consensus was that investors and advisors needed greater flexibility to preserve the value of these college savings plans.

This change is especially important to those whose children are within five years (or less) of starting college as these investors have less time to make up for any losses due to market volatility.  But that being said, every 529 account needs to be evaluated more than once a year.

Now as your annual statements arrive, we urge you to take advantage of this increased opportunity to more effectively manage your college savings program.  Mark your calendars for January and July, and meet with your financial adviser to determine the best strategy for reallocations and preserving capital based on the current market conditions.

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Tags: 529, 529 plan, 529 savings, college savings, college savings program, lee rosenberg

About the Author: Lee Rosenberg is the Co-founder of ARS Financial Services, Inc. As a Certified Financial Planner with more than 34 years of solid financial expertise. Lee is a registered representative of Cadaret, Grant & Co., Inc. He was also named one of the top 25 Independent Financial Advisers in the US by Rep magazine.

This entry was posted on Wednesday, January 21st, 2009 at 4:07 pm and is filed under Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.