What recourse do I have if I'm unhappy with my college savings plan's investment performance?


Unfortunately, not as much as you would probably like. Under federal law, 529 plan account owners aren't allowed to directly control their investments. This can present a problem if your college savings plan investments are not performing as well as you expected.

But you may have some options. First, depending on your plan's specific rules, you might be able to direct any future contributions into one or more portfolios that are different from what your existing contributions are invested in. Also, the IRS allows states to let you change your investment option for your existing contributions twice per calendar year. But it's up to individual states whether to allow this flexibility. Check with your specific plan for more details. Keep in mind, though, that even if you can change your investment portfolio, you can never choose the underlying investments that a portfolio invests in--the plan's money manager is responsible for this.

Besides these options, there's a more drastic (though effective) way to get rid of college savings plan investments that are performing poorly. You can roll over your college savings plan account to another 529 plan (college savings plan or prepaid tuition plan) once every 12 months without penalty and without changing the beneficiary. Since different plans offer different investment choices, the rollover option gives you a way to exchange poorly performing investments for new ones. Please note, however, that rollover contributions may not be eligible for a state income tax deduction if your state offers one for 529 contributions. Check with your tax professional for more information.

Finally, if you have more than one child, you might consider changing the beneficiary of your account. If your account was previously invested in an age-based portfolio (one that depends on your child's age and gradually shifts to more conservative investments as your child grows older), many plans will change the investment option to a different portfolio to reflect the new beneficiary's age. But if the plan doesn't impose a new age-based portfolio on you, you might still be given the opportunity to change your investment option for the new beneficiary, because the IRS has given states the discretion to allow such an investment change when a new beneficiary is named.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in each issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.

Please be advised that this materials is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transactions(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent advisor.

Information provided has been prepared from sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Data and information is not intended for solicitation or trading purposes. Please consult your tax and legal advisors regarding your individual situation. Neither AXA Equitable nor any of the data provided by AXA Equitable or its content providers, such as Broadridge Investor Communication Solutions, Inc., shall be liable for any errors or delays in the content, or for the actions taken in reliance therein. By accessing the AXA Equitable website, a user agrees to abide by the terms and conditions of the site including not redistributing the information found therein.

AXA Equitable Life Insurance Company (NY, NY). Securities are offered through AXA Advisors, LLC, NY, NY 212-314-4600 (member FINRA / SIPC). AXA Equitable and AXA Advisors are affiliated companies, do not provide legal or tax advice and are not affiliated with Broadridge Investor Communication Solutions, Inc.

© Copyright 2018 Broadridge Investor Communication Solutions, Inc. All rights reserved.

GE 119696 (12/2016)

Image used for Space here