New Enrollment Date options focus on when your beneficiary goes to school
On July 14, my529 introduced three enhancements to our plan.
The changes occurred automatically. Please review your account.
Age-Based investment options became Enrollment Date options
my529’s four predetermined Age-Based options (Aggressive Global, Aggressive Domestic, Moderate, and Conservative) automatically transitioned on July 14 to Enrollment Date options, similar to target date portfolios in retirement plans.
Customized Age-Based, Customized Static, and all Static investment options did not shift to Enrollment Date.
Net Asset Value
Long a financial industry standard, a Net Asset Value (NAV), or unit price, will now be calculated daily for all my529 investment options, and for the underlying funds within the Customized options.
Account owners will be able to see the value of each unit they own as well as the value of their account.
Each Enrollment Date and Static option, as well as the underlying funds in the Customized options, will now feature a unique ticker symbol. The ticker symbols will facilitate online performance tracking.
Enrollment Date options
Enrollment Date investment options are similar to target date funds in retirement plans.
You can choose an Enrollment Date option based on when your beneficiary may enroll in higher education or when you pay K-12 tuition expenses.
my529’s Enrollment Date options are invested in a mix of domestic and international stocks and bonds as well as principal preservation holdings that include a stable value fund and FDIC-insured accounts.
The allocations move from aggressive to conservative holdings as your beneficiary approaches their date of enrollment. For example, the Target Enrollment 2040/41 option is invested solely in stocks today, but the allocations will become more conservative over time. In 2040, the option’s investments will shift into the Enrolled option, the most conservative.
Benefits for account owners
Smoother glide path. The Enrollment Date investment options offer a smoother glide path than Age-Based options, with quarterly 1.25% step-downs in stock allocations.
Smaller step-downs from stocks to principal preservation allocations should reduce the size of a possible loss due to market fluctuation.
Variety of risk tolerance. You can choose an option based on your risk tolerance and will no longer be tied to an option based on the age of your beneficiary. Options with later enrollment years, like 2040/2041, feature more stocks (more aggressive). Enrollment Date options closer to the present, such as 2022/2023, offer a higher concentration of bonds and principal preservation funds (more conservative). See chart on page 1.
Flexibility. Invest for higher education or K-12 tuition expenses.
How Age-Based options transitioned to Enrollment Date options
my529 transferred the options based on the percentage of stock holdings, with no more than a 10% difference in the percentage of stocks between the Age-Based options and the new Enrollment Date options.
It’s possible that your beneficiary’s expected date of enrollment does not line up with the year of the Enrollment Date option. If you would prefer a different option, you can use one of your two annual allowed option changes.
Net Asset Value (NAV)
As of July 15, each Enrollment Date and Static investment option now features a NAV, where fees, dividends, and interest are reflected daily, as well as market gains and losses. Fees are no longer charged on the last business day of the month. In addition, fees, dividends and interest are not posted on quarterly statements. The NAV displays the value of the units you own.
The total value of your account did not change during the NAV transition. The daily NAV calculated for July 15 will include 15 days of accrued fees, dividends and interest earnings in addition to market gains or losses for that day.
my529 has unitized the underlying funds in the Customized options. Each fund has been assigned a new name and ticker symbol. As of July 15, my529 has generated a NAV for each fund.
You are now able to use ticker symbols to follow the daily performance of your Enrollment Date or Static option. You can track the status of your option online, at my529.org, or within your personal financial software. Underlying fund selections within the Customized options also have received ticker symbols.
See full list of ticker symbols at my529.org.
Read the updated Program Description at my529.org to learn more about the changes. Questions? Reach out to my529 toll-free at 800.418.2551 or email firstname.lastname@example.org.