Smart529

FAQs

General Information
q.
Is SMART529 a "Qualified Tuition Program"?
a.

Yes, and therefore it has special tax advantages unavailable in other savings vehicles. For example, with SMART529, withdrawals for qualified higher education expenses are free from federal income tax and West Virginia Personal Income Tax. (This program is allowed under Section 529 of the Internal Revenue Code, hence the "529" in our program's name.) Non-qualified withdrawals are taxable as ordinary income to the extent of earnings, and may also be subject to a 10% federal tax penalty. Such withdrawals may have state income tax implications.

q.
What are the eligibility requirements for participation?
a.

An Account Owner can be any adult U.S. resident or citizen, a business or a non-profit organization. Your Designated Beneficiary can be any U.S. citizen or resident of any age. You can even open an account for yourself, and there is no state residency requirement. However, West Virginia offers special state tax incentives for West Virginia taxpayers. Residents outside West Virginia should review their own state's qualified tuition program, including any state tax or other advantages it may provide, before investing in SMART529.

q.
Can I change my investment option (investment strategy)?
a.

Investment options may be changed, tax-free, twice during any calendar year.

q.
Who controls the account?
a.

The Account Owner has complete control of withdrawals and other changes to the account.

q.
At what colleges and trade schools can I use my SMART529 assets?
a.

Most 2 or 4 year accredited colleges or universities, vocational, technical or graduate schools in the U.S., as well as a limited number of overseas programs. To check if a U.S. institution is accredited, call the Federal Student Financial Aid Center at 1-800-433-3243

q.
What happens if the child receives a scholarship?
a.

If the beneficiary receives a grant or scholarship, that amount can be withdrawn from the account. If that money is not used for other qualified higher education expenses, the portion of the withdrawal that represents earnings will be subject to ordinary income taxes. But it will not be subject to a 10% federal income tax penalty. Proper documentation of the scholarship may be required.

q.
What are the options if my child doesn't attend college or if the money saved is not needed for college expenses?
a.

In that instance, the Account Owner has three options: (1) Leave the money in the account, in case the Designated Beneficiary decides to attend school later; (2) Change the Designated Beneficiary to an eligible family member1 of the current beneficiary; or (3) Withdraw the money. In that event, account earnings will not only be subject to ordinary income taxes, but a 10% federal income tax penalty may also apply. Such a withdrawal may have state income tax implications.

1 Please see the Offering Statementimage for a definition of elegible beneficiaries and eligible family members.

q.
What if the Designated Beneficiary dies or becomes disabled and does not attend college?
a.

The Account Owner has two options: (1) Change the Designated Beneficiary on the account to another eligible family member1 of the current beneficiary, or (2) Withdraw the account value. In that event, account earnings will be subject to ordinary income taxes.

1 Please see the Offering Statementimage for a definition of elegible beneficiaries and eligible family members.

q.
How do I make changes to my account?
a.

Download, complete and submit the appropriate form under Forms & Documents. You may also contact Customer Service toll-free at (866) 574-3542 to request a form.

q.
Can I access my account online?
a.

Yes, you can access your account whenever you want.

q.
Can I change the Beneficiary?
a.

Yes. Beneficiary changes can be made and are income tax free if made to an eligible family member1 of the current beneficiary.

1 Please see the Offering Statementimage for a definition of elegible beneficiaries and eligible family members.

 
Investment Options
q.
What can I choose from?
a.

SMART529 offers a variety of investment options to allow you to choose how best to meet your financial objectives and risk tolerance. You can enroll directly or with the help of an investment professional. Review the Offering Statement of each product you are considering for details and descriptions of investment options. Keep in mind, you may change the existing investment allocation twice per calendar year.

q.
Are there any investment performance guarantees?
a.

There are risks, including the possible loss of the principal amount invested. The contributions or earnings are not guaranteed or insured by the State of West Virginia, the West Virginia State Treasurer's Office, The Hartford or its affiliates, or any depository institution.

q.
Can I change my investment option (investment strategy)?
a.

Investment options may be changed, tax-free, twice during any calendar year.

Eligible Expenses
q.
What college expenses can I save for with SMART529?
a.

Qualifying expenses include tuition, fees, room, board, books, equipment and supplies required for attendance, according to the IRS guidelines. The amount that can be saved for each may be limited by IRS regulation (see the College Savings Offering Statement for more information).

q.
Are there college expenses that I cannot use SMART529 assets for?
a.

Miscellaneous items, such as travel, transportation, personal expenses, entertainment and equipment that is not specifically required for college attendance.

 
Opening an Account
q.
How do I enroll?
a.

Many investors choose to open an account using the professional advice and assistance of an investment professional. Check your telephone directory for a local bank representative, investment firm or investment professional in your area. West Virginia residents who prefer making their own financial decisions can invest in SMART529 WV Direct online image by downloading the appropriate forms and mailing the completed forms back. You can also request a printed enrollment kit be mailed to you.

 
Contributions
q.
What's the most that can be contributed per Designated Beneficiary?
a.

You can contribute as much as you like to your SMART529 account until the account balance reaches $265,620 (including earnings and any amounts invested in the Prepaid Tuition Plan), at which point no further contributions can be made.¹ If a designated beneficiary has more that one account in their name, the combined account balances may not exceed $265,620.

¹ For more information about the aggregate amount that can be invested for any Designated Beneficiary, please see the College Savings Offering Statement or Prepaid Tuition Plan Disclosure Statement and Participation Agreement.

q.
What's the minimum contribution per Designated Beneficiary?
a.

Once you've established an account, you can add as little as $25 per investment option. (West Virginia residents have no investment minimum.)

q.
How do I make additional contributions to my account?
a.

Online
Log in image to your account, enter your banking instructions, indicate the amount you wish to contribute, and submit the instructions.

By Check
Simply make your check payable to SMART529, write your beneficiary number (which can be found on your statement) on your check and send it to:
SMART529 WV Direct
P.O. Box 55362
Boston, MA 02205

 
Taxes
q.
What are the West Virginia state tax advantages?
a.

West Virginia state tax advantages include the ability to reduce your federal gross adjusted income by the amount contributed to a SMART529 account when figuring your West Virginia Personal Income Tax. Tax deductible contributions must be postmarked by December 31 of the year for which the deduction is taken.  Qualified distributions are not subject to West Virginia State Income Tax.

q.
What are the federal tax advantages?
a.

Earnings in your account have the potential to accumulate on a tax-deferred basis until withdrawn.  Qualified distributions are not subject to federal income tax. Any earnings are taxable upon distribution and all non-qualified distributions from the account may also be subject to a 10% federal income tax penalty.

See the offering statement for a listing of Qualified Expenses.

 
Distributions
q.
How do I withdraw money from the account?
a.

OnlineLog in image to your account, select Investment Management, and make a distribution.

Or, the Account Owner simply returns a completed Distribution Request Formimage to the SMART529 Service Center.  Checks can be sent to the Account Owner, Beneficiary or Eligible Higher Educational Institution. Withdrawals can be made at any time and usually take five business days to process.

 
Updated 12/02/2016