Suze Orman

2009 Online Updates
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January 5, 2009

IRS allows extra portfolio change for 529 college savings accounts in 2009

In 2009 investors will be allowed to rebalance their 529 college savings accounts two times during the calendar year. In previous years, the IRS permitted just one portfolio change per year per account. (If you change the beneficiary of the 529 account you are allowed one additional rebalancing during that calendar year.)

The IRS’ special rule for 2009 comes on the heels of a frustrating 2008 for many parents. After rebalancing their children’s 529 account early in 2008, they were unable to make any additional changes as the year progressed and the stock markets suffered large losses.

Action Step: If you follow a long-term asset allocation strategy for your 529 Plan, you shouldn’t need to rebalance more than once a year, but it’s nice to know that if you feel the need to make another change later in the year, you can.

On page 169 of the Action Plan book is my recommended mix of stocks and bonds based on the age of your child.

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