The systematic exchange program allows investors to exchange a set amount of money from one investment option to another at regular intervals, according to a company news release.
One popular use of a systematic exchange program is for investors who are apprehensive about market conditions to invest a lump-sum amount in a conservative option and systematically exchange money to a more equity-based option, Strong said
Some of the distinctive features of Strong’s program include the:
- ability to move between nearly any portfolio within a plan, not just from conservative to aggressive options
- ability to move from fixed to age-based options and vice versa
- flexibility to designate a wide range of frequency options
- ability to exchange from no-load into advisor-sold share classes
- access to a low minimum transaction amount.
Investors who want to take advantage of the high contribution limits of 529 plans may want to consider the systematic exchange program as well, Strong said. Investors can contribute up to $55,000 to a person in a single year without triggering gift taxes by prorating that contribution over five years in a 529 plan.
The systematic exchange program is currently available on the Strong 529 Plan (Nevada), the American Skandia College Savings Program (Nevada), the Oregon College Savings Plan (Oregon), the FACTS 529 Plan (Oregon), EdVest (Wisconsin), and Tomorrow’s Scholar (Wisconsin).
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