At first, it may soundodd for an Iowa resident to consider investing in a West Virginia 529 Plan. But, weve investigated college saving and investment plans and the West Virginia SMART 529 Select Plan is a winner, even for out of state residents.
The primary attractionis the portfolio construction. It uses low fee and low turnover (stock trading) institutional funds to create global diversification that has asset allocation to reduce risk but capture market rates of return. This passive investing technique is preferred over many of the retail mutual funds that use stock picking or market timing which have been shown to add risk and reduce returns in portfolios.
Many 529 plan use only fixed rate or bonds that will not capture all the market reruns. As a resultthese529 plans will not keep up with the risingcost of education and this erosion of purchasing power should be an important consideration when funding future educational plans. Market risk isreduced by broad diversification in the West Virginia plan.
Check out the plan highlights below.
West Virginia SMART 529 Plan Highlights
- This plan is a savings plan (not a prepaid tuition plan)
- This plan accepts contributions until all account balances in West Virginia’s 529 plans for the same beneficiary reach $265,620.
- You can enroll directly with the program. In other words, you dont need a financial advisor to open and invest in this plan.
- There is no enrollment fee.
- The $25 annual maintenance fee is waived if you enroll in the automatic investment plan, have a balance of at least $25,000, or are a West Virginia resident.
- The investment expenses range from 0.67% – 0.78% total.
- There is no state residency requirement. In other words, you dont need to reside in West Virginia to participate in this plan.
- The minimum contribution requirements are reasonable. If you just want to contribute periodically, you need a lump sum of $250 for the first contribution. After that only $25 is required per contribution.
If you set up an automatic investment plan and have contributions taken out of your bank account on a regular basis, the minimum contribution is $25.
- You get to choose among age based and static investment portfolios.
529 Plan Benefits
- All investments grow federal income tax deferred and are distributed tax free when used for qualified educational expenses.
- You can super fund a 529 Plan for children, grandchildren, or any loved one without paying gift tax or using your unified credit exemption. This means that you can put five years with annual gifts into an account all at once ($13,000 x 5 = $65,000)
Click here to get to www.saving for college.com to compare various 529 plans.