As a PA 529 IP account owner, you own units of your chosen investment portfolio, not shares of the plan's underlying investments.
Blended Stock and Bond Portfolios
100% Bond and Short-Term Investment Portfolios
100% Stock Portfolios
College students and parents who receive refunds for tuition, room and board, or other qualified expenses paid from a PA 529 account can re-contribute their refund back into their PA 529 plan account within 60 days of the date of the refund to avoid paying any penalty or taxes on the earnings. In addition, IRS Notice 2020-23 provides an extension for refunds to be recontributed by July 15, 2020 or 60 days from the refund date, whichever is later. PLEASE NOTE, RECONTRIBUTED FUNDS WILL BE TREATED AS NEW CONTRIBUTIONS.
Information for Pennsylvania taxpayers may be found at revenue.pa.gov and irs.gov. Be sure to check how a refund contribution may be treated under the laws of the state where you pay taxes if not Pennsylvania.
While we weather this pandemic, adopt a “do-what-you-can” mantra for continuing to save for college. If you’re not able to contribute as much to your 529 right now, that’s okay. Give yourself a break. If it’s doable for you, consider lowering your regular contributions instead of stopping them. PA 529 plans have minimums as low as $15 or $25. Though no one can guarantee exactly what the market will look like tomorrow, keeping your future goals in mind is important – just as it is with retirement.
If you have been saving for college with a 529, you may have a lot of questions right now. With long-term investments, market downturns happen and so do recoveries.
Your child’s dreams and your goals for their future are long-term and boundless. As you evaluate your savings and investment goals, it's important to keep your savings time horizon, risk tolerance, and overall objectives in mind.
If you withdraw money from your 529 account for nonqualified expenses, you will pay taxes on the earnings portion of that withdrawal and may also be subject to a 10 percent penalty. There also may be state and local taxes and/or penalties that would apply on the entire withdrawal. Information for Pennsylvania taxpayers may be found at revenue.pa.gov and irs.gov.
When considering an investment change or withdrawal, it's important to remember that liquidating your assets or switching investments may lock in losses if markets rebound. Because investing and making changes to those investments is an important decision, you should consult a tax or investment advisor about your particular circumstances.
Given recent market volatility, it's important to remain calm and evaluate your risk tolerance, savings time horizon, and overall investment goals when considering investment choices. In doing so, be sure to carefully review the options in which you are invested and available alternatives before making any changes.
In general, the majority of 529 plans offer age-based investment options, which are designed to balance risk and return in light of the beneficiary's age. The PA 529 Investment Plan offers 3 age-based options where portfolios are automatically moved to more conservative investments as the age of the beneficiary increases as well as 14 individual portfolios where you can choose from a variety of stock, bond, short term reserves and balanced investment options in which the allocations remain constant within a specified range.
Your savings time horizon, risk tolerance, and investment objectives will help you determine whether a change is in order. Keep in mind, however, that changes to existing investment options can be made only twice per calendar year or upon change in the beneficiary.
Because investing and making changes to those investments is an important decision, you should consult a tax or investment advisor about your particular circumstances.
If your child has a 529 account and is in college or about to attend college, talk to someone with the school’s financial office about all options available to you to cover the costs of the coming semester. Initiating the conversation early will give you an idea of how to proceed once classes resume.
Though no one can guarantee exactly what the market will look like tomorrow, taking steps to prepare for the future can be beneficial in college savings just as it can be with retirement. If you are in a financial position to do so, continuing to invest in a 529 plan now may benefit you in the long run.
Many people will be receiving federal stimulus checks in the coming weeks to use for immediate financial needs such as day-to-day expenses including groceries, bills and rent or mortgage payments. If you don’t need them for those purposes, experts advise using them to build an emergency fund, pay down some debt, or save for tomorrow. If you consider investing a portion of this money for your child’s future education, read more about the PA 529 College and Career Savings Program.