Winchester — There’s a new way to save for your children’s college education.

The Virginia College Savings Plan, which offers tax-free 529 plans and prepaid tuition accounts, is now offering the College Wealth 529 Savings Account.

The College Wealth plan partners with community banks to provide savings plans that grow tax free — as long as the money is used for higher education expenses. These are the same tax-free advantages as the other 529 plans.

Lauren Fabin, 14, holds up her winning artwork in front of Handley High School, where she is in the ninth grade. (Jeff Taylor)

The difference is that Virginia’s other 529 plans are invested in the stock market, offering potentially higher returns but also greater risk.

The College Wealth program is designed for people who find the stock market intimidating, too risky, or would just like to be able to walk into a bank and deposit their money with a teller.

College Wealth accounts are savings accounts or CDs. Interest rates are established by the participating bank, and the accounts are insured the Federal Deposit Insurance Corp. for $100,000.

In the Winchester area, Rappahannock National Bank is participating in the program. The bank has branches at 1095 Millwood Pike just east of the city and 25 W. Piccadilly St. in downtown Winchester.

To open an account at Rappahannock, you’ll need to make a minimum $1,000 deposit and pay a $25 annual fee. Subsequent deposits must be at least $50 each, said Stacy Scott, assistant vice president and bank operations administrator for Rappahannock Community Bank.

The interest rate, which is tied to the prime rate, is running at 3 percent now, said Scott.

In addition to the federal tax advantages, Virginia taxpapers receive up to $2,000 a year in state tax deductions for every dollar saved in a College Wealth account.

You don’t have to be a resident of Virginia (as you do for the prepaid tuition accounts). And if your child doesn’t use the money, the funds can be transferred to another recipient.

"So if your son wants to go off and be a hippie, you can assign it to your daughter," said Scott.

The money doesn’t have to be used at a Virginia school either. It can be used at any school that accepts federal financial aid.

"Even the NASCAR school takes it," Scott said.

 On the Internet...
www.virginia529.com