How to Transfer 529 Plans

Most 529 plans are eligible for transfer once every 12 months.

Transferring your existing 529 college savings plan to another 529 plan is relatively easy once you have the paperwork in order. Researching the available 529 plans and finding the one that best suits your investment needs can take time. Make sure that the plan you wish to transfer is eligible.

Advertisement

Transferring 529 College Savings Plans

Step 1

Verify that the account you wish to transfer is eligible. Unless you are changing the beneficiary as well, most plans restrict you to one transfer every 12 months. If you are changing beneficiaries, the plan description for your current plan will let you know if you can transfer the account in less than 12 months.

Step 2

Select the new 529 plan you want to open. Plans vary widely from state to state. Each one has different investment options and fee structures. Choose the plan that is most compatible with your investment needs and has the lowest fees.

Advertisement

Step 3

Open the new 529 account and submit the required transfer paperwork. The old 529 plan should be able to directly transfer the account to the new plan, known as a direct rollover. Very few plans, if any, will insist on sending you a check that you would then submit to the new plan.

Tip

Take the time to shop around for the best plan to suit your investment needs. Investment options and fees vary with each plan. Check into your state's 529 plan. Many offer residents special incentives, like a tax deduction for contributions or a matching funds program.

Warning

529 plans are only eligible for transfer once every 12 months. Carefully choose the investments for your 529 plan. Investments can only be changed once every 12 months. Like any other investment that involves stocks, bonds, or mutual funds, 529 plans can decrease in value. Investments should be more conservative as you get closer to the time you will actually need the money. If the old 529 plan sends a check to you instead of the new 529 account, be sure to forward the check promptly. Otherwise, there may be tax consequences, including a 10 percent penalty.

Things You'll Need

  • Existing 529 account information, including the account number

  • Transfer paperwork for new 529 plan

Advertisement

references & resources