The Internal Revenue Service is allowing 529 college savings plan account owners to change their selected investment strategy twice per calendar year. Previously, account holders were only permitted to do so once per calendar year. In addition, owners still may change the selected investment strategy upon a change in the designated beneficiary of the account. Current IRS guidance indicates that this increased investment direction flexibility is applicable only for calendar year 2009.

In its guidance, the IRS indicated that the change was made in response to concerns that the lack of flexibility might interfere with the preservation of the value of a section 529 account in light of recent volatility and changes in the markets. Because of the previous once-a-year limit, 529 account holders who changed their investment strategy early in 2008 could not make adjustments later in the calendar year. Whether and when to change an investment strategy is a personal decision that should be made in consultation with your tax or financial adviser, considering many factors including the age of the designated beneficiary of an account and other available resources.

The Virginia College Savings Plan is modifying systems to allow account owners in the Virginia Education Savings Trust (VEST) to take advantage of this increased flexibility in 2009 should they choose to do so. Other options include opening a new VEST 529 savings account with a different investment strategy for further diversification. Current Virginia Education Savings Trust account owners may choose to change their current investment strategy by completing an Investment Direction Change Form, found at Virginia529.com.

The increased investment direction flexibility for 2009 will also be available in Virginia’s other 529 savings plans—CollegeAmerica and CollegeWealth. CollegeAmerica account holders should contact their financial adviser or the American Funds at 1-800-421-4120 or on the web at www.americanfunds.com. CollegeWealth participants should contact Union Bank & Trust at 1-866-593-1100, Northern Neck State Bank at 1-866-593-2200, and Rappahannock National Bank at 1-866-593-4400.

For more information on the IRS guidance, go to http://www.irs.gov/pub/irs-drop/n-09-01.pdf to view Notice 2009-1.