Topic
Once A Year 529 Policy, Call Your Congress Representatives!
A user asked to post his email here:
Hi MyPlan Team,
Thanks for the pros and cons of 529 plans in the Newsletter. Very useful and informative. You advise against using TAA for these plans. "The infamous only once per year re-balance rule: this rule makes any tactical allocation strategy practically impossible". And "In general, because of the once per year re-balance limitation, we do not recommend using tactical asset allocation. Strategic asset allocation is the only feasible tool to manage these portfolios."
However, if you look at the performance of the plans below in the article, in two of the four plans, the TAAs have the best returns. And TAA will help avoid--or at least have a chance at avoiding--those huge drawdowns like we experienced in 2008-2009. Of course, it is wise to manage the plan conservatively when your child approaches the college years, however, don't you think it would be reasonable to use aggressive, low fixed income values (like zero) (high risk asset %)TAA when your child is an infant or very young? Especially now, when fixed income investments are likely to have no appreciation in the coming years like they did in the prior 10 years?
I hope Congress does change the 1X/yr rule for changes and goes to at least quarterly. I plan to contact my Congressman and the authors of the Bill to help push for this change to get passed. Given the incompetence of Congress and all the other stuff they have to contend with, I doubt this will get much attention any time soon. Perhaps public pressure will help.
PS. I would have posted this in the Forum, but could not figure out where to put it. Move it to the Forum as if you wish. Thanks.
Admin asked · 12/06/2012
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