Client lives in California and has purchased a Virginia based 529 college savings. His financial adviser told him that Virginia plans offer advantageous investment options. The client says that Virginia law provides that Virginia 529 plans are exempt from creditor claims. The clients asks about the protection of his Virginia plan under California and Florida law.
More specifically, the client wants to know if his Virginia plan is protected notwithstanding California’s 529 law. He also asked me if the Virginia plan would be protected if he moved to Florida, and whether he would have to move the investments to a Florida based 529 plan. His exemption of the 529 plan would be based upon California’s laws as long as the client remains in California. Most states do not import exemptions provided by sister states, and a California resident’s interest in a Virginia law would be based upon the state of residence (California). I am not familiar with California’s 529 exemption statute.
Florida, a just a few other states, exempt their resident’s interest in 529 plans regardless of where the plan is situated. A Florida resident’s 529 plan is exempt if it is a Florida plan or if the plan is opened and maintained under the 529 program in any other state. Florida Statutes exempt money paid in to, or our of the assets and income of any qualified tuition program under Section 529 of the Revenue Code, including but not limited to the Florida program. This client’s Virginia 529 plan would be protected if he moves to Florida.
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Jon Alper is an expert in asset protection planning for individuals and small businesses.
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