Opening a West Virginia Smart529 college savings account requires no minimum contribution, and whoever opens up an account for a child before his or her first birthday will get a free $100 invested.
Gina Joynes, the state's deputy treasurer overseeing communications, said the "Bright Babies" initiative's free $100, provided by a program management firm rather than taxpayer money, is also invested into accounts of adopted children of all ages that are opened before the first anniversary of their adoption.
"It's just such a great opportunity for any parent, or grandparent - anyone can open up an account for a child," Joynes said.
West Virginia's 529 plans also offer a state income tax deduction, she said. The plans, according the Smart529 website, provide those who open accounts with a range of investment options, including age-based portfolios that invest more in stocks, which have a higher chance for gains but also a greater risk of losses, when a child is younger. As the child nears college age, the investment choices become more conservative, relying more on investments like bonds.
Joynes also touted the fact that the 529 accounts can be transferred from one beneficiary to another - for instance, if one child decides not to pursue college but another child could use the money for his or her own education. Adults can use the accounts to fund continuing education, and the savings can be used for educational expenses at four-year colleges, community colleges and other schools both in and outside of the Mountain State.
"It's very flexible," Joynes said.
The Smart529 website states withdrawals can be made at any time, and contributions can be made through automatic payroll direct deposit.
According to the U.S. Securities and Exchange Commission's website, every state and Washington, D.C., sponsors at least one type of a 529 plan, which is named after its Section 529 of the Internal Revenue Code. Individuals can invest in other states' plans, though special options are often offered for in-state investors, including in West Virginia.
The SEC states that withdrawals from the plans can generally be used to cover all "qualified higher education expenses" - including tuition, mandatory fees, books and room and board - and earnings in the plans aren't subject to federal and, in most cases, state taxes if the money is used for these expenses. But those who don't use the dollars on eligible expenses are generally hit by both income tax and an added 10 percent federal tax penalty on earnings.
The SEC says 529 plans also have no state guarantee, and investments in them do have the ability to decline in value. Investors should also take into account a plan's fees.
For more information on West Virginia's plans, visit smart529.com and for more information on 529 plans in general, visit sec.gov/investor/pubs/intro529.htm
Reach Ryan Quinn at ryan.quinn@wvgazettemail.com, facebook.com/ryanedwinquinn, 304-348-1254 or follow @RyanEQuinn on Twitter.