Essentially nothing, if you have a 529 college savings plan. You can leave the account funds in your
former state’s plan with no penalty, and then tap those funds at college time. Alternatively, you can roll the assets over from your old state’s 529 plan to your new state’s plan if both plans allow it, keeping the same beneficiary (you can only do a rollover once per year). Check the details of each plan carefully before you start any transfer.
Some 529 plans may require a minimum time period, such as one year, before withdrawals (including rollovers) can be made from an account for any reason. Again, check both plans to make sure there are no withdrawal limitations.
One advantage of a rollover is that you can reallocate your 529 funds to a different investment portfolio (or portfolios) when you join the new plan. So, you might be able to invest more or less aggressively, depending on your personal situation and market factors.
Finally, if you have a prepaid tuition plan and you move to another state, contact your plan administrator. Prepaid tuition plans are geared to state residents and funds are restricted to in-state public colleges. Now that you’ve moved out of state, there may be consequences.
Note: Before investing in a 529 plan, please consider the investment objectives, risks, charges, and
expenses carefully. The official disclosure statements and applicable prospectuses, which contain this and other information about the investment options, underlying investments, and investment company, can be obtained by contacting your financial professional. You should read these materials carefully before investing. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also the risk that the investments may lose money or not perform well enough to cover college costs as anticipated. Investment earnings accumulate on a tax-deferred basis, and withdrawals are tax-free as long as they are used for qualified education expenses. For withdrawals not used for qualified education expenses, earnings may be subject to taxation as ordinary income and possibly a 10% federal income tax penalty. The tax implications of a 529 plan should be discussed with your legal and/or tax professionals because they can vary significantly from state to state. Also be aware that most states offer their own 529 plans, which may provide advantages and benefits exclusively for their residents and taxpayers. These other state benefits may include financial aid, scholarship funds, and protection from creditors.
This content has been reviewed by FINRA.
Prepared by Broadridge Advisor Solutions. © 2024 Broadridge Financial Services, Inc.
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