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Amy Goan, MBA, CFP®
Email: amy@prismfinancialplanning.com
18708 SE 45th St., Issaquah, WA 98027
425-641-5717

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October Update on Washington's 529 GET Plan

The GET Committee met on Wednesday, October 7th and discussed the possibility of opening a traditional 529 College Savings Plan for Washington residents. By “traditional” they mean a plan where you essentially purchase mutual fund shares and thus your 529 value can fluctuate with the market. However, any growth in your account value will not be subject to taxes as long as the money is used for college expenses. This is the structure that most other states offer for their 529 plans.

Recommendation:

Roll over your current GET account into another state’s 529 college savings plan. (I like Utah.)

In my previous blog post I recommended rolling over your GET plan into another state’s 529 plan if your purchase price was greater than $117.82, but hold on to your GET units if your purchase price was less than $117.82, until we got more information. I wanted to know whether they were going to continue to offer a “guaranteed” 529 plan. Since it looks like they’re going the college savings plan route I think it’s time to roll over your account into a more established college savings plan. Right now, the payout per unit is the greater of the price you paid for each unit, or $117.82.

If you stay invested in the GET plan your account value won’t grow, since the $117.82 payout will stay the same for the 2015-16 and 2016-17 academic years. Although the value of your GET won’t decrease, it also won’t increase if the investment markets increase.

The reason I’m not recommending you transfer into another state’s guaranteed tuition 529 plan is we don’t know that the same issues won’t happen to them. Recently, there has been more political discussion about lowering the cost of college throughout the country, so this is a possibility.

[Beware: You should hold off on rolling over your GET 529 if you’ve recently done a 529 rollover for the same beneficiary (i.e. student). According to IRS Publication 970 only one rollover is allowed within 12 months of a previous transfer to any 529 plan for that designated beneficiary.]

Also in my previous blog post I mentioned that it wasn’t clear whether direct rollovers from the GET plan to other 529 plans was an option. The Committee recently clarified that direct rollovers are not an option. If you want to rollover your GET funds to another 529 plan, you can submit a Refund/Cancellation Request form. When your refund check arrives, you have 60 days from the date printed on the check to deposit your funds in another 529 plan to avoid federal taxes and penalties. However, due to the high volume of requests, you will receive your refund 10 to 12 weeks from the date it was received.

The GET Committee’s next meeting is Thursday, December 3rd. For a complete overview of the recent changes to the GET program you can visit their website at: www.get.wa.gov/5954-impacts.

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