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Rodney Van Belle

Rodney Van Belle

Rodney, a Senior Client Analyst at Laird Norton Wealth Management, has 25 years of experience in financial services. A big believer in full-service financial planning, Rodney thinks investments are just one piece of a much bigger puzzle he loves to help clients solve.

Switch from GET to WA 529 Plan? A Big Incentive to Convert

Family and Finance

MONDAY MORNING MIX

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This summer, WA State is offering parents (and grandparents) who invested in GET, the guaranteed pre-paid tuition plan for WA State colleges and universities, what looks like a sweet deal: If you convert your GET units – recently valued at around $104 —  into WA’s new 529 Plan, they are likely to be valued at $140 to $144 each (depending on how well GET investments are performing), a premium of close to 40%. To GET (pun intended) the increase, you must shift into the 529 Plan between June 15 and September 2 of this year. And you must have bought the GET units before July 2015.

A state government with a surplus on its hands?That is unheard of these days. But that is what happened with the GET thanks to big increases in the stock and bond markets in the past decade, and WA State tuition not rising as much as anticipated. Some initial thoughts for those considering converting from GET to 529:

The WA State 529 Plan (DreamAhead College Investment Plan) is new this year. But it is based on the same tried and tested model in existence in other states. The program is managed by BNY Mellon and the underlying mutual funds are run by major financial firms (see our earlier blog post on this). So you are not going into the unknown with the WA 529 Plan. BUT, your tuition will no longer be guaranteed. The returns on the underlying mutual funds you chose to invest in determine how much you’ll have when it comes time to pay tuition. Money put into a 529 Plan grows tax-free and can be withdrawn tax-free to pay for school tuition  at virtually all US colleges and universities (plus major foreign universities) and also kindergarten through high school (thanks for the 2017 tax law).

The two plans — GET and WA 529 — are not mutually exclusively: you can keep your GET units and also put money into the WA State 529 Plan. The GET units are also likely to see an increase in value of around 15%, according to the Seattle Times.

One immediate thought is that if your children are in high school now and you decide to switch to the 529 Plan, you should consider investing more conservatively. Remember: with a 529 Plan, tuition is no longer guaranteed. But a 529 does provide you with more investment options as well as how the money can be used.

To find out more about the GET conversion offer, read this Seattle Times article.

For more on 529 Plans, check out these LNWM blog posts:
— Investment Options in the WA State 529 Plan

— 529 College Savings Plans: 5 Timely Tips

— UTMA, Trust, 529 Plan: Which account is best for your young child?

 

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