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Prepaid Tuition Plan Account Owner-Frequently Asked Questions
You should expect to receive the lump sum final payment within approximately 7-14 days after the September 30, 2021, mailing date. If you do not receive your check by October 14, 2021, please call Customer Service as soon as possible at 1-866-574-3542, prompt 3, with this information and for assistance.
Please note: there will be a “freeze” on distribution requests from September 27, 2021, through September 30, 2021, while your final lump sum payment is processed and your check is issued and mailed. Requests for distributions made before September 27, 2021, will be fulfilled and the unit valued as usual.
You will have 60 days to cash your lump sum final payment after it is issued. If the check remains uncashed after 60 days, your Plan assets will be presumed abandoned and the final lump sum payment will be forwarded to the Unclaimed Property Division of the West Virginia State Treasurer’s Office. If this occurs, your benefits/assets can only be claimed through the process prescribed by the Unclaimed Property Division.
No, you will not. Your Plan assets will be presumed abandoned if your final lump sum final payment is outstanding upon check expiration and will be forwarded to the Unclaimed Property Division of the West Virginia State Treasurer’s Office. If this occurs, your benefits/assets can only be claimed through the process prescribed by the Unclaimed Property Division.
If you deposit your lump sum final payment within 60 days of the distribution into a SMART529 savings account or other qualified tuition plan, it will be considered a tax-free rollover. If you make any tuition payments during this year before you receive the lump sum final payment, you may be able to offset such tuition later with the final payment as a Qualified Distribution. If the preceding applies to your circumstances, please consult with a qualified tax professional. If your lump sum final payment is not used for eligible plan expenses or deposited into another qualified tuition plan, it will be considered a Non-Qualified Distribution. A Non-Qualified Distribution is generally considered a taxable event subject to federal and state income tax or penalty. You should consult with a qualified tax professional to discuss how this lump sum final payment may affect you.
Yes. You will receive a Form 1099-Q. Each January following a year in which a distribution was made from your Account, a Form 1099-Q reporting the earnings portion of any distribution will be sent. The Form 1099-Q will be sent to the Account Owner. The information on the Form 1099-Q is also reported to the Internal Revenue Service. The Form 1099-Q recipient is responsible for determining whether the earnings portion of the distribution is taxable, for retaining appropriate documentation to support this determination, and for appropriately reporting earnings on the recipient’s income tax forms. Check with your tax professional regarding any tax reporting required on your tax returns.
The lump sum final payment will be mailed on or about September 30, 2021, to the address on file. As the Account Owner, you are responsible for updating your address, as necessary, with Customer Service to ensure your receipt of all Plan mail, including but not limited to, your final payment check. You may change your address online, over the telephone with Customer Service at 1-866-574-3542, or by using the change of address form and mailing it to the Customer Service Center. Go to Forms and Documents for complete information on how to change your address and to access the change of address form. You are responsible to update your address, if necessary, by September 15, 2021, to ensure your check is mailed to the correct address.
Your benefits may be rolled over into a SMART529 College Savings account or other 529 plan provided that funds are contributed to the other savings plan within 60 days of the issuance of your final Prepaid Tuition check or the transaction may be deemed a Non-Qualified Distribution which is generally considered a taxable event subject to federal and state income tax or penalty. You should consult your tax professional if you have questions regarding any potential taxable events.
Yes. If you do not have an existing SMART529 account, you may open an account at SMART529.com and designate your child as beneficiary. Deposit your WV Prepaid Tuition Plan check into your bank account. Write a new check to SMART529 in the exact amount of your final payment check from the Prepaid Tuition Plan. Mail your check in time to ensure that it is postmarked within 60 days of the date that your final payment check was issued to avoid a taxable event. You should also submit a copy of your WV Prepaid Tuition Plan principal and interest statement to SMART529 for rollover purposes.
Using the steps above, you may be able to rollover benefits to a SMART529 account or other qualified tuition plan. Please consult with a tax professional for more information.
As noted above, if your lump sum final payment is not used for eligible plan expenses or deposited into another qualified tuition plan, it will be considered a Non-Qualified Distribution. A Non-Qualified Distribution is generally considered a taxable event subject to federal and state income tax or penalty. If you cannot allocate the entire amount of your final payment check to pay for qualified expenses within 60 days of the check’s issuance, one option to avoid the check being deemed a Non-Qualified Distribution is to rollover the full amount of the check into another 529 plan, such as West Virginia’s SMART529 plan. You may then use the funds from your 529 Plan to pay qualified educational expenses as needed. Please consult a tax professional for more information. Features and Benefits of a SMART529 account are described at https://www.smart529.com/smart529-details/features-and-benefits.html.
You may open a SMART529 savings account now by visiting www.SMART529.com. The SMART529 plan is another college savings plan under Section 529 of the Internal Revenue Code and includes 529 portfolios that invest in underlying funds and not a prepaid plan that issues units. Unlike the Prepaid Plan, you will have to select from the 529 portfolio options in SMART529. 529 portfolios performance fluctuates, for example, like mutual fund performance varies. There is no guarantee of performance for SMART529 or other 529 plans. You should carefully consider the investment objectives, risks and charges and expenses of SMART529 and its Underlying Funds before investing.
For questions concerning the Prepaid Plan, please contact Customer Service at 1-866-574-3542, prompt 3. For questions concerning SMART529 college savings plans, please contact Customer Service at 1-866-574-3542, prompt 1.