Notice 2009-1 amends the provisions of Notice 2001-55 to permit a qualified tuition program to change the investment strategy selected for an account twice per calendar year (rather than once per year) for 2009, as well as upon a change in the designated beneficiary of the account. It is expected that the final regulations will incorporate this special rule for 2009.
In response to concerns that have been caused by the recent condition of the financial markets, commentators have requested more flexibility in the special rule in Notice 2001-55 that conditionally permits a change in the investment strategy selected for a section 529 account once per calendar year, and upon a change in the designated beneficiary of the account. Specifically, the commentators requested the ability to change the investment strategies more frequently. Accordingly, Notice 2009-1 amends the provisions of Notice 2001-55 to further provide that a program does not violate the investment restriction under section 2 529(b)(4) if it permits a change in the investment strategy selected for a section 529 account twice per calendar year for calendar year 2009, as well as upon a change in the designated beneficiary of the account, subject to the program requirements as detailed in Notice 2001-55.
The Treasury Department and the IRS expect that final regulations will incorporate this special rule for 2009.
Posted by Min Young Choi, Associate Editor, Wealth Strategies Journal.
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