Up until now, participants in a 529 savings plan were not permitted to direct the investment of their accounts. The investment option you place your contribution into is the one it had to stay in. That is no longer the case. Realizing that 529 savings plan participants may have good reason to desire a switch in their investments (family circumstances change; the market goes the wrong way; etc.), the IRS has just announced a new policy that permits 529 plans to give their participants the opportunity to change their investment strategy once every year. (Notice 2001-55) This new policy represents a significant loosening of the rules and should help 529 savings plans attract many families who otherwise might be spooked by the investment restrictions. The new policy takes effect immediately, although it will be up to the individual state to make the appropriate changes to their program rules.