If you have a loss in a 529 college savings plan because of the stock market meltdown, what can you do?
* Cash in the account. You might be able to get a tax deduction for the amount of your loss. However, this would be a miscellaneous itemized deduction and such miscellaneous outlays are deductible only to the extent they exceed 2 percent of your adjusted gross income.
* Change investment strategies. Many 529 plans are invested in age-based accounts. As kids near college, their 529 accounts get more conservative: fewer stocks and more bonds. If you have young teenagers, this strategy works against you because you’ll be shifting into bonds when stocks are cheap. You might want to change investment strategies and keep more money in stocks.
* Change beneficiaries. You can’t change 529 investments more than once per calendar year. If you want to make more frequent revisions, you can change beneficiaries when you change strategies. You can change beneficiaries as often as you’d like. If you have two children, for example, 529 accounts can go back and forth between them with every change in investments.
