Investing in 529 -- risk?

[Anonymous]

We have been investing for our daughter's education in the Nevada Vanguard 529 plan. In looking over the website today (thinking about tweaking our fund selection and upping our monthly contributions), I came across the following statement and find it completely baffling. Any thoughts? And any thoughts on any risks inherent in 529 investing that are not present in regular taxable brokerage accounts??? (Apart from the general risk that the gov't may change the tax treatment of 529 withdrawals.)

Not a typical mutual fund investment
The Vanguard® 529 College Savings Plan (The Vanguard Plan) is a 529 college savings plan sponsored by the state of Nevada. Although money contributed to The Vanguard Plan will be invested in underlying Vanguard mutual funds, The Vanguard Plan itself is not a mutual fund. The state of Nevada has created a trust specifically for the purpose of offering 529 college savings plans, including The Vanguard Plan. An investment in The Vanguard Plan is an investment in municipal fund securities that are issued and offered by the trust. These securities are not guaranteed by the state of Nevada, Vanguard, Upromise, or any other entity, and are not registered with the U.S. Securities and Exchange Commission. Investments in The Vanguard Plan can go up or down in value, and you could lose money by investing in The Vanguard Plan.

https://personal.vanguard.com/us/content/Funds/FundsImportant529InfoJSP.jsp

[Anonymous]

Short answer: Don't worry.

Legalese answer: 529 plans need to be "municipal securities" for a bunch of reasons. Municipal securities are securities...issued by municipalities. When the system requiring registration of securities with the SEC was created in the 1930s, politicians made sure to carve out what they might need - municipal securities. So municipal securities aren't subject to the requirements/cost of registration with the SEC. They are instead subject to the rules of the Municipal Securities Rulemaking Board (MSRB). They are also subject to the antifraud provisions of the Federal Securities Laws even though they are not registered with the SEC.

[Anonymous]

I think the risk is less.

[Anonymous]

Op here - thanks for the legalese explanation - super helpful. I am a lawyer, but am not familiar with securities law, do your comment was illuminating.