IRS approves new refund formula for I-529 Plan
In letter ruling 200621033, IRS grants approval for a proposed change in the method used by the Independent 529 Plan to calculate refunds from the program. Currently, a refund of contributions is adjusted for the actual investment return of the program trust fund, limited to plus or minus 2% annualized. Independent 529 Plan had submitted a request in 2004 for IRS approval of a change whereby the limits are based on the yield of five-year Treasury notes as determined on a quarterly basis. Assuming Treasury note yields exceed 2% on an annualized basis, this change will allow a larger positive or negative adjustment to the refund if, for example, the beneficiary attends a non-participating college. Return to 529 News center
At this time, Independent 529 Plan has not implemented this change nor has it indicated whether it intends to implement it.