NC 529 Plan Eliminates Two Investment Options
North Carolina's 529 College Savings Plan will be eliminating two investment options - the CollegeHorizonFunds and the Balanced Fund - due to their higher fees. Click "Continue Reading" to view the text of the letter from the North Carolina National College Savings Program, which contains details about switching from those fund options.
Dear NC 529 Plan Participant:
This letter is to notify you of changes regarding the CollegeHorizonFunds (managed by RiverSource Investments, LLC which acquired J.&W. Seligman & Co.) and the Balanced Fund (managed by Wachovia Bank, N.A. through its affiliate Evergreen Investment Management Company, LLC). If you have requested to receive notification by standard mail, you also will receive this notice via that method.
Since the NC 529 Plan presently offers two age-based and two balanced fund options, the decision has been made to eliminate CollegeHorizonFunds ("CHF") and the Balanced Fund which charge higher fees than the age-based and balanced V funds. By making the low-cost V funds, featuring mutual funds from The Vanguard Group, the age-based and balanced investment options, the NC 529 Plan can help Participants save for college in this tough economic period.
Your Options
If you have an investment allocation to CHF and/or the Balanced Fund you may either (1) move your money out of these fund allocations any time prior to 4:00 p.m. on June 15, 2009; or, (2) wait for the NC 529 Plan to automatically move your money to the designated V Fund allocation. Both options are discussed in more detail below. There will be no transaction cost whether you choose to move your investment allocation to another NC 529 Plan Investment Option or have your investment automatically moved by the NC 529 Plan.
If You Choose to Change Your Investment Allocation
Your paper or online request to make changes regarding CHF and/or the Balanced Fund (including distributions, rollovers, or changes to current allocations) must be received by the NC 529 Plan in good order prior to 4:00 p.m. on June 15, 2009. Otherwise, your investment allocation will be automatically moved, as discussed below. Please note: If you decide to change your investment from the Balanced Fund or CHF to another NC 529 Plan Investment Option, it will count as one of your permitted changes in investment options for 2009. For 2009 only, the IRS allows you to make two such changes.
If You Do Not Change Your Investment Allocation; Automatic Transfer to Designated V Funds
If you do not move your money out of CHF or the Balanced Fund prior to the 4:00 p.m. June 15, 2009 deadline, the NC 529 Plan will automatically reallocate your money from CHF to the Age-Based V Fund, Moderate Track and from the Balanced Fund to the V Fund 3 (featuring the Vanguard LifeStrategy Conservative Growth Fund).
On each day during the five-day period beginning on Monday, June 22, 2009 and ending on Friday, June 26, 2009, the NC 529 Plan will sell an approximately equal portion of your outstanding interest in CHF and/or the Balanced Fund. At the same time, the NC 529 Plan will use the money from the sale to purchase an interest in the applicable V Fund. At all times during the automatic move, you will be invested in one of the funds, which means you will not be out of the market. The automatic move will not count as one of your permitted changes in investment options for 2009.
More Information
For any questions regarding the discontinuation of CHF and the Balanced Funds, including treatment of future allocations, please review the Frequently Asked Questions or call us toll-free at 800-600-3453 Monday – Thursday from 8 a.m. – 8 p.m. or Friday from 8 a.m. – 5 p.m. Eastern Time.
Since you can park your 529 money with other states, you might consider a program like Virginia's CollegeAmerica 529 (www.collegeamerica529.com).
RESPONSE: Yes, but North Carolina residents would lose the opportunity to get a NC income tax deduction for contributions (up to $2,500 per year, $5,000 for married couples) if they invest in other states' plans. Also, they may have to pay NC income tax on the earnings.