If you own units in the state's Guaranteed Education Tuition plan that were purchased before July 2015, you have until Sept. 12 to decide if you want to roll the money over to a different account.
If you have questions about a new state law that allows you to roll units in the state’s prepaid college tuition plan over to a college savings plan, you’re certainly not alone.
Wait times to talk to a representative with the Guaranteed Education Tuition (GET) plan are running an hour or more, as the state agency that manages the plan fields questions from parent investors. Meanwhile, the clock is ticking: You have until Sept. 12 to make investment changes.
Below, we’re listing the six most commonly asked questions (and answers) which GET customer-service staff find themselves answering about the rollover. In addition, two GET representatives will hold a webinar Wednesday on Facebook, and live events are planned for later in the month (although nothing in the Puget Sound area has been scheduled yet).
But first, a recap. Earlier this year, the state Legislature passed a new law that offered people who owned GET units an incentive to roll the units over to a new type of plan known as a 529 college savings plan. While Washington has offered a prepaid tuition plan since 1997 — allowing parents to pay tuition costs years before their children enroll in college using a tax-free fund — the 529 savings plan is new for this state.
Most Read Local Stories
- Seattle police clear CHOP protest zone WATCH
- Coronavirus daily news updates, July 1: What to know today about COVID-19 in the Seattle area, Washington state and the world
- At least 80 UW students in fraternities test positive for coronavirus, a foreboding sign for college reopenings
- Snohomish County might move back to Phase 1 if coronavirus cases climb more rapidly
- Shooting at Seattle's CHOP protest site kills 16-year-old boy, leaves 14-year-old seriously injured
Here’s the difference: In a nutshell, GET is a guarantee but the state’s 529 savings plan (called DreamAhead) is a riskier investment, with rewards tied to the market.
As a prepaid tuition plan, GET is a guarantee that if you buy 100 units, those units will always be worth one year of tuition and fees at the state’s most expensive public four-year university, regardless of inflation. It’s like an insurance policy, or a forever stamp — no matter how much tuition and fees go up, 100 GET units will cover it. The state of Washington assumes the risk.
The DreamAhead 529 college savings plan works more like a 401(k) or Roth IRA. As an investor, you decide how much of your money is put into stocks or bonds. There’s no guarantee: You assume the risk, but also the possibility of a greater reward if the market does well.
GET currently includes a reserve of nearly $600 million, or 33 percent more than it expects to pay out to its account holders over time, assuming tuition changes as the years pass. Tuition cuts combined with gains in the stock market caused the reserve to grow. So this spring, as a way to slice up the surplus, the Legislature passed a law that allows families who purchased GET units before July 1, 2015, to roll them over into DreamAhead. And if you do switch your plan, the state will reward your choice: This fall, one GET unit is worth $106.01, but if you roll that unit into DreamAhead, you’ll receive $143 per unit.
Before the rollover process started, there were 96,000 GET accounts, said Lucas Minor, senior associate director of the program. (A child can have more than one account to his or her name.) So far, 9,300 account holders — a little less than 10 percent — have switched their accounts over to the market-tied plan. GET officials do not yet know how much money this represents. The GET fund contains about $2.2 billion.
Here are a few of the questions customers are asking — along with answers from Minor:
1. When will rollovers be processed?
It can take up to seven weeks to process a request.
2. How soon can I expect to be able to use my funds to pay for college expenses after submitting a rollover request?
Customers can begin using the funds once the money reaches the DreamAhead account — potentially up to seven weeks. However, BNY Mellon — the company managing DreamAhead — requires a 30-day hold period after a new bank account is added to a DreamAhead account to complete an electronic funds transfer (EFT). If you can’t wait, you can either request a paper check or have DreamAhead pay the institution directly.
3. Can I roll funds back into GET or into another 529 plan? If so, are there restrictions?
You can make one rollover per student within a 12-month period, as stipulated by the IRS. If you roll your money over from GET to DreamAhead, you must wait one year before rolling the money over again — regardless of whether you roll it back into GET, or to another state’s 529 plan.
4. If I choose to stay in GET, how many additional units will I get?
That depends on how much you paid for your units, and how the rollover shakes out. Customers who paid more than $117.82 per unit will be eligible to receive additional units during what the GET committee is calling a “first adjustment”; exactly how that adjustment will work is captured in a video GET has posted online. The adjustment won’t be calculated until after the DreamAhead rollover has ended — that is, after Sept. 12. The “second adjustment” is dependent on the funded status of GET after the rollover window and first adjustment have passed. After the first adjustment, if GET still has 25 percent more money than it needs to pay off its obligations, everyone who still owns GET could receive a second adjustment. The legislation did not set an upper limit on the number of units you could receive after the first adjustment, but it did set a limit of 15 percent more units for the second adjustment.
5. If I stay in GET, when will GET make the unit adjustments to my account?
Neither adjustment can occur until after Sept. 12. For the units that cost more than $117.82, the first adjustment will likely happen later in the fall, probably sometime in November. The second adjustment will be finished no later than March 1, 2019.
6. I have other questions, and I can’t get through on the phone. How can I get help?
You can leave a message on the toll-free line (1-800-955-2318) to request a callback, email GET at GETInfo@wsac.wa.gov, send a secure message through your online account, or register for the free webinar on Wednesday. There are also materials explaining the rollover process available on GET’s website, and you can find a list of on-site presentations on GET’s Facebook events page; as of early August, sessions had been scheduled for Spokane; Yakima; Battle Ground, Clark County; and Tumwater, Thurston County.