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You raise an interesting question that is worth checking out, but you have a couple of assumptions that I'm not sure are valid. One assumption is your contrast between what you call a buy and hold strategy and the 529 plan, which you imply is not a buy and hold strategy. Another assumption is that the 529 plan will be entirely fickle, subject to the whims of state officials (this reminds me of the concerns many felt about Roth IRAs when they first came out).

Yes, the administrator can change the fund family for new investors, but would the original money you invested be turned over to the new fund? Also, why would they change fund families if the original family was doing its job well, as, for instance, Alliance Capital has done for many years? If they did make a change that you felt was for the worse, you can always put new money into another plan or adopt a new strategy (in my case, putting more money into the custodial fund I set up seven years ago for my son). Your assumption of onerous surrender fees may not be correct either.

But thanks for raising these issues. I'll be sure to ask about them before I apply for the plan.

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