• 529 Facts For Financial Literacy Month

    by Amy Lyle | Apr 20, 2018

    April is designated Financial Literacy Month. When you’re thinking of saving for your children’s future higher education costs, there’s a lot of information to sort through. To help, Ohio’s 529 Plan, CollegeAdvantage, answers the most frequently asked questions we’re asked about these tax-advantaged college savings programs.

    529 plans can be used nationwide

    Just because you are placing your college savings in Ohio’s 529 Plan, CollegeAdvantage, that doesn’t mean your child must attend a post-secondary school in Ohio. The funds in your 529 account can be used at any federally accredited institution nationwide. If the school has a Federal School Code on the Free Application for Federal Student Aid (FAFSA), then withdrawals for the qualified higher education expenses at that school will be tax free. 

    529 plans are not just for four-year programs

    529 plans are created to be used at any federally accredited educational institutions – whether for a two-year, four-year, graduate or professional degree, or any other post-secondary credential. This list includes community colleges, vocational or trade schools, graduate schools, and even some study-abroad programs.

    529 minimally affects financial aid

    When filling in FAFSA, the 529 account is considered an asset. When owned by a parent, the funds in a 529 plan are only assessed at a maximum of 5.64% of its value. For lower-income families, this percentage rate could be lower.

    Federal student aid is available in a variety of forms. Need-based federal financial aid is typically offered in the form of grants, loans or work-study. With Pell Grants, this aid given to a student will not have to be repaid. Federally subsidized student loans and parental loans must be repaid after college with interest by either the student or you. Work-study programs allow enrolled students to work part-time to earn money for some college costs. Make sure you understand what type of aid is being offered to see whether or not you will have to repay it with accrued interest.

    Another reason to fill out FAFSA: Other organizations — like states, universities, colleges, and private organizations — also use it to determine what institutional scholarships or loans to offer to students interested in attending their school.

    529 plans designed to work with scholarships

    Your Ohio’s 529 Plan account is still an important component of your college-saving strategy even if your child does earn a scholarship. Very few scholarships cover 100% of the costs; for instance, a scholarship may only cover the cost of tuition. A 529 plan is perfect for filling any gaps with other qualified expenses such as: room and board during any academic period the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology and services; books; supplies; and equipment required for enrollment or attendance; and certain expenses for a special-needs student.

    And if my child decides not to go to college?

    You always have access to the money you have saved in a 529 plan. Hold onto to the account to see if your child rethinks the decision. There are no time limits for when a 529 account must be used. Let the 529 plan sit and watch the tax-free earnings continue to grow. If not, you can transfer the funds to any member of the family of your beneficiary, including yourself, without any tax consequences.

    What are the tax benefits of 529 college savings plans

    First, all earnings in a 529 plan are tax-free, so all investment growth is yours to spend on higher education costs. To see how tax-free growth can build your 529 account, use the tax benefit tool to see how the funds in a 529 grow compared to a taxable savings account.

    Second, 529 plan withdrawals to pay for qualified higher education expenses are tax-free at federally accredited programs. 

    Third, Ohio offers deductions from taxable state income to in-state residents who contribute to the Ohio’s 529 Plan. Effective Jan. 1, 2018, Ohio’s state tax deduction was doubled to $4,000 per year, per beneficiary, with unlimited carry forward. Unlimited carry forward means that $4,000 is not an annual contribution cap. As an Ohioan, if you contribute more than $4,000 in one year, you can continue to subtract $4,000 per year, per beneficiary, from your State of Ohio taxable income until all the 529 contributions are deducted.

    Open an Ohio 529 Plan today to start saving for your children’s future higher education costs. Every dollar saved today is a dollar that doesn’t have to be borrowed which makes a 529 college savings plan an excellent alternative to student loan debt. If you need help determining how much to put aside each month to reach your college savings goal, fill in the College Savings Planner to receive personalized saving estimate. Please note that this is an example for illustrative purposes only. For additional advice, consult with your legal, financial, tax, or other advisor.

    Ohio’s 529 Plan, CollegeAdvantage, is your plan, your way.

  • Let The Power Of Compound Interest Help Your 529 Plan Take Off

    by Amy Lyle | Apr 17, 2018

    If you’ve been to the movies, or watched a multitude of TV series recently, you’ve seen many, many superhero stories. These champions always stretch themselves to overcome obstacles and to come to others’ aid. There’s a superhero in the financial world as well, a college savings superhero – compound interest. Its super powers can really make your Ohio 529 college savings plan soar!

    Able to leap over simple interest in a single bound, compound interest is dynamic powerhouse that can grow a 529 account. Here’s how.

    Simple interest vs. compound interest

    Simple interest is the interest on the principal only. Compound interest is the interest on the principal as well as any other accrued interest. For Ohio’s 529 Plan, CollegeAdvantage, compound interest is accumulated on the original as well as any additional 529 contributions, any earnings from the 529 investment options, and any accrued interest.

    For sake of simplicity, let’s use the same numbers to create examples for a college savings account with simple interest and one with compound interest. You have contributed $10,000 to a 529 plan. The principal — or the original contribution — could grow at 5% over the next 5 years. With these examples set, we can contrast the total interest accumulated in a simple interest account to a compound interest account.

    With the simple interest example, the original contribution of $10,000 with 5% will earn $500 in interest each year. Over five years, the account will total $2,500 in a simple interest account.  

    With compound interest example, the original contribution of $10,000 could earn 5% for a total of $500 in interest in the first year. In the second year with compound interest, the new starting point includes the interest from the first year added to the original contribution for a total of $10,500. With 5% interest, the total interest in the second year would be $525. In the third year, the new opening amount could be $11,025, which could grow an additional $551.25 assuming 5% interest. For the fourth year, the starting amount in the example is $11,576.25. At the end of the year assuming 5% interest, the amount could grow by $578.81. In the fifth year of this example, we have an opening amount is $12,155.06. Assuming 5% interest, the account could grow by $607.75. So over five years in this scenarios, the compound interest account could grow to $2,762.81.

    So, the compound interest account could earn an additional $262.81 over five years in this scenario when compared to the simple interest account. And who wouldn’t like to have those extra funds in their 529 account as they prepare to cover their student’s future higher education costs?

    Compound interest with a 529 plan

    For a 529 college savings plan, the compound interest is accrued not just on the original contribution but every contribution as well as the earnings from the 529 investment options and the already accumulated interest.

    If you’d like to see the power of compound interest, use this calculator from U.S. Securities and Exchange Commission to input your information to see how compound interest can build up your college savings account.

    The effect of compounding is especially powerful over a long period of time as the amount of earned interest grows larger and larger. This is an excellent reason to start as 529 fund as early as possible for your child – to maximize the effects of compound interest in the account. Whether you’ve started saving for your child’s higher education before they are born or if you are getting a later start, Ohio’s 529 Plan, CollegeAdvantage, offers account strategy suggestions based on your child’s age. These life milestones are the perfect opportunity to start, ramp up your saving, and take advantage of Ugift and Upromise. Based on your child’s age — baby to toddler, kindergarten to elementary school, middle school, high school, and college — review the appropriate guidance and choose for yourself the best path for your 529 account.

    Loans: Where compound interest can become a villain

    In a 529 plan, compound interest works for your best interests. On the flip side, accrued interest on a student loan debt can set back financial success as the interest will grow on the amount borrowed as well as unpaid accumulated interest. Taking into the consideration of the above simple vs compound interest example, imagine how accrued compound interest on a loan can accumulate. So it’s never too late or too early to start saving for your child’s future higher education costs. Any funds you can set aside in a 529 account is money your child won’t have to borrow for their education.

    Additional tax benefits for saving in a 529 plan

    Ohio’s 529 Plan, CollegeAdvantage, was established by Section 529 of the Internal Revenue Code to encourage parents to save their children’s future higher education costs in a tax-advantaged manner. The tax benefits of a CollegeAdvantage Direct 529 Plan account are:

    1. All earnings in a 529 plan are tax-free, so all investment growth is yours to cover college costs.
    2. 529 plan withdrawals to cover qualified higher education expenses are tax-free at federally accredited programs. These expenditures include tuition; room and board (on and off campus) when the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student.
    3. Ohio residents who contribute to Ohio’s 529 Plan, CollegeAdvantage, can deduct their contributions from their taxable state income. Effective Jan. 1, the deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward. However, $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions are deducted.

    Ohio’s 529 Plan Tools and calculators

    Want to crunch the numbers yourself? CollegeAdvantage has its own tools and calculators to see how your 529 savings can add up. With the college savings planner, you can input your own figures to receive an estimated monthly savings amount needed to reach your savings goals. Use this tool to vary the amounts of monthly contributions to see how setting aside a little more money can really add up. The tax benefit tool can illustrate how the tax benefits of a 529 plan can build the account when compared to a taxable savings account. The cost of waiting tool can determine how much more money you’ll need to save to reach your college savings goals if you aren’t able to maximize the power of compound interest. Your asset allocation strategy is one of the most important investment decisions to make. If you aren’t sure what level of risk you’re willing to take in your investment strategy, the risk tolerance questionnaire can determine your comfort level.

    Continue to be your child’s superhero; open an Ohio’s 529 Plan account for them today for their future higher education costs. An investment in a 529 plan is an investment in your child. Every dollar saved today is a dollar that doesn’t have to be borrowed which makes Ohio’s 529 college savings plan an excellent alternative to student loan debt. Ohio’s 529 Plan, CollegeAdvantage, is your plan, your way.

  • Ohio's 529 Plan Age-Based Portfolios Will Be Updated

    by Amy Lyle | Apr 13, 2018

    In keeping with current industry standards, Ohio’s 529 Plan, CollegeAdvantage, will update our ready-made age-based portfolios next month. The Ohio Tuition Trust Authority (OTTA) Investment Board approved these changes and they will be implemented May 18-20, 2018.

    These updates will smooth out the larger age steps currently found in the glide paths of our ready-made age-based portfolios. A glide path determines the asset allocation mix within an investment option. In an age-based 529 portfolio, the mix is achieved through step-down age bands. When the beneficiary is younger, the asset allocation mix includes more stocks. Equity is more heavily used in the beneficiary’s younger years as stocks are more readily affected by market volatility and if there is an economic downturn, there will be more time to recover. As the beneficiary grows older, the asset allocation mix adjusts with each new age band, reducing the amount of equity and increasing the amount of more conservative investing vehicles such as fixed-income and cash preservation options. A large age band keeps the portfolio in one asset allocation mix for a long period to weather any fluctuations in the market. This smooth glide path is similar in concept to retirement target-date funds. 

    Beginning in May, CollegeAdvantage ready-made age-based portfolios will offer two variations on smoother glide paths.

    First, Advantage Age-Based Portfolios (AABP), a blend of active management and passive-index based portfolios, will adopt an enrollment date-based progressive glide path based on the beneficiary’s year of college enrollment. This approach allows the 529 account owner to stay in a single fund over the entire time horizon before the beneficiary heads to college. This enrollment date-based investment option will automatically reduce risk in the portfolio in small increments as the beneficiary ages. When the beneficiary is younger, there is a greater amount of equity in the AABP’s asset allocation mix. The closer the time comes for the beneficiary to head off to college; the asset allocation mix becomes more conservative with a greater focus on cash preservation. Within the portfolio, the asset allocation will be rebalanced quarterly, smoothing out this progressive glide path. The CollegeAdvantage customer will not see changes in their AABP option as they will stay in the same year-to-fund enrollment.

    For your additional information, we have included the birth date ranges for each of the year of enrollment options. Please examine these ​Ready-​Made ​College-​Enrollment-Date ​​Portfolios on the Investment Option Choices chart. These ranges are predefined and the beneficiary’s date of birth automatically determines the year of enrollment fund.

    Second, Ohio’s 529 Plans also offers Vanguard ready-made age-based portfolios, which are passive index-based investment options. These portfolios will adopt a smoother glide path by increasing the number of age bands within each of the three risk tracks — aggressive, moderate, and conservative.

    The current Vanguard glide path includes five age bands that range in length from three to four years. With the new stepped-down approach, there are nine age bands, which reduce the larger allocation shifts between equities, fixed income and cash options in the larger age buckets. By adding these new age bands, the new glide path allows for smaller changes in the asset allocation mix as the beneficiary moves towards college. As with the AABP, there is greater amount of equity in the younger age bands that methodically moves towards being more conservative as the beneficiary draws closer to needing the funds for college. Each of the three risk tracks will decrease the amount of equity in the portfolio differently. For example, the aggressive age-based portfolio will retain more equity in the older age bands. ​P​lease review Investment Options Choices chart to see the new age bands in the Vanguard Ready-Made Age-Based Portfolios.

    These changes will be made for all account owners currently invested in an age-based portfolio. If your current investment portfolio includes a ready-made age-based portfolio, you will automatically be mapped into the corresponding new option. If you are invested in an AABP, you will be moved into a new fund based on the targeted year of college enrollment of your beneficiary. If you are currently in a Vanguard age-based product, you will be shifted into the correct age band, based on the beneficiary’s age, in your current risk track.

    This exchange is initiated by Ohio’s 529 Plan so it will not count towards your twice-per-calendar year limit on exchanges.

    As part of the update, there will be no secure system access to accounts ​from 4 p.m. ET on Thursday, May 17, to 8 a.m. ET Monday, May 21​, 2018.

    To further review the new ready-made age-based portfolios, please ​go here. To ​read the 30-Day Notice letter sent to affected account owners, please visit here. If you, as the account owner, are currently invested in an age-based portfolio, you will receive further information from Ohio’s 529 Plan regarding these upcoming changes in the mail. A new Offering Statement reflecting these updates will be available on our website, CollegeAdvantage.com, on Friday, May 18, 2018.

  • Fifth Third Raises 529 CD Rates Again

    by Amy Lyle | Apr 13, 2018

    Fifth Third Bank, an investment option partner with Ohio’s 529 Plan, ​has increas​ed the rates on five terms of 529 Certificates of Deposit (CDs) as of Thursday, April ​12, 201​​8. Fifth Third Bank is a member of the FDIC.

    cd-apys-as-of-04-5-2018-chartThe rate for the 6-11 Month 529 CD will be raised from 1.00% Annual Percentage Yield (APY) to 1.50%, an increase of 0.50%. The interest rate for 12-23 Month 529 CD will increase from 1.25% APY to 1.70% APY, an increase of 0.45%. For the 24-35 Month 529 CD, the rate will increase from 1.55% APY to 2.00% APY, an increase of 0.45%. The APY for the 36-47 Month CD will rise from 1.65% to 2.00% for an increase of 0.35%. The increased rate for the 48-59 Month CD is now 2.00%, up from 1.75% for an increase of 0.25%.

    This is the fourth time in less than a year that Fifth Third has increased the 529 CD rates; the other times were in January 2018, October 2017, and August 2017.

    If your student is starting their higher education soon and you want to be more conservative in your 529 saving plan, you have options. The minimum contribution to add a CD to your 529 investments is $500. Current CollegeAdvantage Direct 529 Plan account owners can purchase a CD online. Log in in to your Direct Plan account and make a one-time electronic contribution from your bank account to buy a CD. After logging in, you can also go to “Change Your Investment Options” section to exchange a current investment with a $500 minimum to buy a CD. You can also download an Additional Contribution Form and mail it with a check to purchase a CD.

    Once the CD reaches maturity, the balance will transfer to a Fifth Third 529 Savings Account. At this point, you can withdraw the funds, exchange the funds to another Fifth Third 529 CD, or to other CollegeAdvantage investment options, or leave the money in the savings account to earn interest. Please remember that federal regulations for qualified 529 programs limit the number of times account owners can reallocate investment options for the same beneficiary. The 529 account owner is allowed to make two exchanges of assets from one investment option to another per calendar year, per beneficiary. Please refer to the CollegeAdvantage Direct Plan Offering Statement and Participation Agreement for additional details.

    If the 529 CD is liquidated prior to its date of maturity, there are penalties assessed. Both the Fifth Third 529 Savings Account and the Fifth Third 529 CDs are FDIC-insured investment options.

    Go here to purchase a CD with these higher interest rates and start saving for your child’s future higher education expenses today! If you haven’t opened a CollegeAdvantage Direct 529 Plan, it’s easy to enroll online and purchase a Fifth Third 529 CD at that time. Ohio’s 529 Plan, CollegeAdvantage, has tools to help you determine how much to save for future college costs as well as to see the cost of waiting to save. Remember, it’s far cheaper to save for college now and earn interest in an 529 account than pay off students loans with accumulated interest later. CollegeAdvantage is your plan, your way.

  • Blue Jackets & CollegeAdvantage College Savings Assist Winners Announced!

    by Amy Lyle | Apr 11, 2018

    CollegeAdvantage's first College Savings Assist Giveaway with the Columbus Blue Jackets ended recently. This giveaway ran from Feb. 26 to March 25, 2018. During that time, we received almost 14,500 entries!

    Our grand prize winner, TJ Woods, won the $10,000 college savings award! TJ and his family were presented the award Tuesday, April 3, 2018, during the Blue Jackets victory over the Detroit Red Wings. He plans to use the college savings award to add to his three children’s CollegeAdvantage 529 accounts.

    The second-place winner, Robert Stalter, is the lucky winner of a visit from Stinger to an area school.

    Eight runners-up will receive autographed Blue Jackets memorabilia.

    Here’s the list of the 10 lucky people who were randomly selected as winners:

    Grand prize winner: TJ Woods

    Second place winner: Robert Stalter

    Runners-Up: Autographed Blue Jackets Memorabilia*

    • Archie Zantopulos
    • Kelley Paul
    • Chris Bata
    • Kira Redinger
    • Alan Scaia
    • Patrick Newton
    • Donald Parks
    • Kristin Bailey

    Congratulations to all our winners! Thank you to everyone who participated, and good luck to the Blue Jackets in the Stanley Cup Playoffs!

    Please note that the list of winners is subject to change.

  • Do 529 Plans Affect Need-Based Financial Aid? No!

    by Amy Lyle | Apr 09, 2018

    You contributed to your Ohio’s 529 Plan account for years, starting early to take advantage of the CollegeAdvantage 529 tax benefits as well as the power of compound interest. Now, your child is now finishing high school and wants to continue their education, whether at an accredited two-year, four-year, graduate or professional, or any other post-secondary schools that accepts federal financial aid.

    Your next step is to submit the Free Application of Federal Student Aid (FASFA) to see if your child qualifies for federal student aid. As you’re reporting your 529 plan as an asset on FASFA, you wonder, “Are all my years of saving for college going to negatively affect our chances of receiving need-based financial aid?” The answer is, “No”, according to a recent study by the Center for Social Development at Washington University in St. Louis. Here’s why.

    Need-based federal and state financial aid

    Federal student aid is available in a variety of forms. Need-based federal financial aid is typically offered in the form of grants, loans or work-study. With Pell Grants, this aid given to a student will not have to be repaid. Federally subsidized student loans and parental loans must be repaid after college with interest by either the student or you. Work-study programs allow enrolled students to work part-time to earn money for some college costs. Make sure you understand what type of aid is being offered to see whether or not you will have to repay it with accrued interest.

    Other organizations — like states, universities, colleges, and private organizations —also use the FAFSA to determine what institutional grants or loans to offer to students interested in attending their school.

    Expected Family Contribution (EFC)

    You will need to submit what your incomes and assets are as well as your student’s assets and income on the FAFSA. This information is added to a formula to determine your Expected Family Contribution (EFC). The EFC represents what a family can expect to cover for higher education expenses. The difference between the total cost of enrollment and the EFC represents the remaining amount that may subsidized through federal student aid, based on need.

    Income and assets are the largest component of the EFC formula. There are income allowances for basic living expenses, taxes, and family size; this equation will weigh parental income on a sliding scale of 22 - 47%. Students’ income will be assessed at 50%, except for two exclusions found in the simplified EFC formula and automatic zero EFC. The next part of the EFC formula is assets. There are many exclusions and allowances in this part of the equation.

    Simplified EFC formula

    If you and your spouse make less than $50,00 in adjusted gross income and also 1) have received federal public assistance in the previous two years; or 2) have filed a1040a or 1040EZ; or 3) are considered a dislocated worker, then your child qualifies for the simplified EFC formula. With this equation, your and student’s assets are not used to formulate the EFC.

    Automatic zero EFC

    If you and your spouse’s income is under $25,000, then your child is qualified for the automatic zero EFC. This sets your family’s income contribution in the EFC formula to zero, and as well as the assets. Your child’s assets also will not be included in determining the EFC.

    With these two provisions, the students who need the most need-based financial aid will not have their parents’ income and assets, as well as their own, counted in their EFC. This increases their monetary assistance funding.

    Additional EFC exclusions

    For families who don’t qualify for the simplified EFC or automatic zero EFC formulas, there are additional EFC exclusions for savings that are held in qualified retirement assets, such as 401(k)s and IRAs; home equity; family businesses; and insurance annuities.

    Allowances for college savings and asset protection

    Lastly, if you have been setting aside asset protection reserves, like an emergency fund, and savings for your children’s college educations— in 529 plans and other savings vehicles, there’s an allowance up to certain level of savings. This allowance will increase as your age increase.

    All the exclusions and allowances greatly reduce the impact that parental assets have on receiving financial aid.

    Remaining assets

    If there are any assets you own that are not listed in these provisions, only a small percentage of it will be included in the EFC. The assets can calculated up to the maximum of 5.64% of its value. For lower-income families, this percentage rate will be lower.

    Center for Social Development’s study shows that with the simplified EFC and automatic zero EFC formulas and the additional exclusions for certain parent-owned assets, then the low​- and moderate-income families who need need-based federal and state financial aid will not penalized for taking steps to save for college expenses.

    Saving for college is a forward-thinking action plan. Your 529 plan has a minimal effect on needs-based federal and state financial aid. There are additional tax benefits for saving in a 529 account for your child’s future college costs. With investing in a 529 college savings plan, all of the money you contribute will grow tax-free and you can withdraw all earnings tax-free, provided that the account is used for qualified higher education expenses. When investing in Ohio’s 529 Plan, residents of Ohio receive an additional tax advantage of deducting their 529 plan contributions to CollegeAdvantage from their taxable state income in any amount up to $2,000 per year, per beneficiary, with unlimited carry forward. This means that $2,000 per year is not a contribution cap. Should you choose to contribute more than $2,000 in a calendar year, any amounts above $2,000 may be deducted in future years, in increments up to $2,000 per year, until all contributions have been deducted.

    If you have a 529 account, keep on saving. The funds you’re investing today to cover their future college costs is an investment in your child. And remember, your 529 plan will have a minimal effect on their chances of receiving need-based federal financial aid.

    If you haven’t started saving in 529 account, Ohio’s 529 Plan offers calculators and tools to build a 529 plan that best fits you and your beneficiary’s needs. CollegeAdvantage also provides 529 account strategies designated by life stages. The CollegeAdvantage Direct Plan offers a variety of investment options including ready-made, age-based or ready-made, risk-based portfolios.

    Open a CollegeAdvantage 529 plan to save for your child’s future training and education. 529 accounts are an excellent alternative to student loan debt. CollegeAdvantage is your plan, your way.

  • Fact: Multiple 529 Plans Work Best For Multiple Kids

    by Amy Lyle | Apr 05, 2018

    Families with more than one child may wonder if they need more than one 529 plan to save for their children’s future college costs. While it’s not necessary, the benefits of a 529 plan customarily can be amplified best if each child has their own 529 account. Why? Here are a few reasons.

    Maximize All The Tax Benefits Of Ohio’s 529 Plan

    529 plans allow for college savings to grow in a tax-advantaged manner. Separate 529 plans for each child would maximize these benefits which include tax-free contributions and earnings and tax-free withdrawals when used to pay qualified higher education expenses.

    For Ohio residents with an Ohio's 529 Plan, CollegeAdvantage, account, there’s an additional tax advantage. Ohioans can deduct their 529 contributions from their Ohio taxable income, up to $​4,000 per year, per beneficiary, with unlimited carry forward. In other words, an Ohio resident can take up to a $​4,000 deduction ​from their state income taxes for each 529 plan with a different beneficiary. So if an Ohioan account owner has three Ohio 529 plans for three children, they can maximize this tax benefit up to $​12,000 per year. Because of the unlimited carry forward for the state income tax deduction, it means that $​4,000 per year is not a contribution cap. The taxpayer can continue to subtract $4,000 per year, per beneficiary, from their Ohio taxable income until all the Ohio 529 Plan contributions have been deducted.

    Take Advantage Of 529 Plans Tax-Free Withdrawals

    To open a 529 college savings plan, it’s started by one account owner for one beneficiary. A family can choose to have only one 529 account which contains all the college savings for their children; however, only the named beneficiary will be able to take advantage of tax-free withdrawals from the 529 account to cover their qualified higher education expenses. For the other non-beneficiary children whose funds are included in the same account, any account distributions made for their college costs would be subject to a 10% federal penalty as well as federal, state, and local taxes. In addition, these funds could only be sent to the account owner or the named beneficiary in these circumstances. The 529 withdrawal cannot be directly sent to the school for an individual that is not the named beneficiary.

    With Ohio’s 529 Plan, CollegeAdvantage, there is no fee to open a Direct 529 Plan account or multiple Direct 529 Plan accounts so families don’t have to pay first to start saving for college.

    Follow Different 529 Investment Plans For Different Ages

    Based on a child’s age, different 529 investment plan strategies should be considered. For instance, if a child still has a long time before attending college, then a 529 plan could include a more aggressive asset allocation, in order to potentially reap higher returns with the increased risk. Additionally, the longer the time period before college, the longer the 529 account can grow with the power of compound interest. On the flip side, if a child is close to needing the 529 account funds for college costs, then a more conservative asset allocation can be adopted so the accrued funds aren’t susceptible to the volatility of the stock market. However, if all the college savings funds for multiple children are kept in a single 529 plan, it may be difficult to modify the investment risk in the account according to the age of each child.

    Ohio's 529 Plan, CollegeAdvantage offers ready-made age-based portfolios as well as ready-made risk-based portfolios to tailor a 529 college savings plan to the individual needs of the beneficiary.

    Benefit From Gift Tax Rules

    Individual 529 accounts for each child also allow family members to maximize federal gift tax benefits. 529 plan contributions are considered gifts to the beneficiary. Per federal 529 laws, individuals can invest up to $1​5,000 ($​30,000 for married couples) per beneficiary without incurring any federal gift-tax consequences. Additionally, an individual can even contribute up to $7​5,000 per beneficiary in a single year ($1​50,000 for married couples) and take advantage of five years’ worth of tax-free gifts at one time. By having multiple accounts for multiple children, an account owner can avoid triggering the federal gift tax. For grandparents who are considering gift tax implications ​while evaluating their estate planning, 529 plans can be smart way to insure that a gift is used for a highly valuable asset — a college education with the least amount of student loan debt. For further information, consult a tax adviser or estate-planning attorney.

    Lessen The Impact On Financial Aid

    529 plans are considered an asset when filing the Free Application for Federal Student Aid and are a component in determining the Expected Family Contribution (EFC). The EFC represents what a family can be expected to cover for higher education expenses. The difference between the total cost of enrollment and the EFC represents the remaining costs that might be subsidized through need-based federal student aid. Current federal guidelines state that if a student is a dependent and the 529 account is owned by a parent, then the 529 plan account will be considered the parent’s asset and will be calculated up to 5.64% of its value when determining the EFC. Pooling college savings for multiple children in one 529 plan will make this account bigger; therefore, it will have a larger impact on EFC. By spreading the college savings through multiple 529 accounts for each child, the asset will be smaller and have a smaller effect on the EFC.

    Easy Transfer Of 529 Funds

    Another benefit of having multiple 529 accounts for multiple children is the ease of transference of the funds from an individual 529 account. If a child finishes their post-secondary education without using all the funds in a 529 plan, the account owner has the option of changing the current beneficiary to another member of the family. The 529 funds already set aside for one child’s college expenses can readily be used by another. 

    By the way, saving for college in Ohio’s 529 plan does not mean that those funds can only be used in Ohio. 529 plans can be used nationwide (and even overseas) at any accredited two-year, four-year, graduate or professional, or any other post-secondary schools that accepts federal financial aid.

    Interested in opening an Ohio 529 plan? Visit CollegeAdvantage online to start saving for future college expenses today. Even small amounts can add up to big savings over time by saving regularly through automatic contributions or payroll deduction. And always, a 529 college savings plan is an excellent alternative to student loan debt. For a good overview on what is a 529 plan, visit SavingForCollege.com for a quick video. CollegeAdvantage is your plan, your way.

  • Learn About 529 Plans During Financial Literacy Month

    by Amy Lyle | Apr 02, 2018

    This story from our Executive Director, Tim Gorrell, originally ran March 27, 2017, on College Savings Plans Network (CSPN) website, collegesavings.org. As their website states, “the College Savings Plans Network (CSPN) was formed as an affiliate to the National Association of State Treasurers (NAST). Established to make higher education more attainable, the network serves as a clearinghouse for information among state-administered college savings programs. Additionally, CSPN monitors federal activities and promotes legislation that will positively affect Section 529 plans.”

    April Is Financial Literacy Month

    April has been designated Financial Literacy Month to focus on increasing the public’s comprehension of basic monetary concepts. Many banking institutions and credit union offer financial wellness seminars. Additionally, university extension offices may provide financial literacy classes. By doing a little research, people can find many free resources available to improve their understanding of how to best use, as well as save, their money.

    For the 529 college savings industry, progress has been made in educating the public about the abundant advantages of these college savings plans and it must continue.

    While student loan debt nationally has risen to $1.48 trillion, there has also been a marked increase over the past ten years in saving for college, which indicates a measure of thoughtful financial literacy. According to the Salle Mae report, “How America Saves For College 2017,” parents covered 31% of college costs. The report also found that families who use 529 college savings plans have saved more than other college savers. A takeaway from the report is people are learning about the added tax benefits and values of 529 college savings plans and are using them.

    Adults Can Use 529 Plans For Their Own Education

    There is still more for the public to understand about 529 plans, including one that many people don’t recognize – that 529 accounts aren’t just for children. If an adult would like to head back to college to finish their degree, hone their professional skills, or start a new career path, then they should consider opening a 529 college savings account for their own college expenses and tax benefits.

    Traditionally, 529s have been used to fund children’s future college costs; however, there are no age restrictions on who can use these college savings accounts and no time limits on when the account must be used. Furthermore, 529 plans were created to be used at any federally accredited educational institution, which includes two-year, four-year, graduate, professional or post-secondary degree programs. For working adults who want to continue their college education to advance their career, they should check with their human resource department to see if tuition reimbursement is a part of the employee benefits. This benefit combined with 529 savings could significantly reduce higher education costs.

    All the tax advantages associated with a child’s 529 account would also apply to an adult’s account. The 529 college savings plan will grow with tax-free earnings on contributions. Withdrawals from 529 plans are also tax free, provided the funds are used for qualified higher education expenses, which includes many large costs like tuition, mandatory fees, and computers. With Ohio's 529 Plan, CollegeAdvantage, Ohio residents can deduct up to $​4,000 from their state taxable income based on contributions made to 529 plans per beneficiary, per year. However, the $​4,000 is not a contribution cap. With unlimited carry forward, the Ohio taxpayer can continue to subtract to subtract $4,000 per year, per beneficiary, from their Ohio taxable income until all the 529 contributions have been deducted.

    An additional benefit to 529 plans: If there is money left over in a child’s plan, the account owner can transfer the remaining funds to the another child's or their own 529 account. No tax penalties will be accessed with the transfer as long as the new beneficiary is a family member. By rolling over these 529 plan assets, the account owner can use the money already set aside for college expenses for their own continuing education.

    People want to understand their finances and make informed fiscal decisions. As they learn more about the multiple benefits of 529 accounts, the use of these college savings plans will continue to grow.

    Consider opening an accou​nt with Ohio's 529 ​Plan to save for future ​higher education costs. Remember, 529 accounts are an excellent alternative to student loan debt. Go online learn more about College Advantage. The Ohio’s college saving program offers calculators and tools to estimate college savings goals, approximate the cost of waiting, determine risk tolerance, and compare the benefits of placing college savings in a tax-advantaged account. Additionally, CollegeAdvantage provides guidance on 529 account strategies by life stage. Partnered with leading investment managers VanguardDimensional Fund Advisors, and Fifth Third Bank, CollegeAdvantage Direct 529 Plan offers a variety of investment options to build a 529 plan that best fits the account owner’s needs. As always, CollegeAdvantage is your plan, your way. 

  • Can Others Contribute To A 529 Plan?

    by Amy Lyle | Mar 30, 2018

    You work hard to save money for your child’s future college costs. But did you know that there is more than one way to save in a CollegeAdvantage Direct 529 plan? You can visit the CollegeAdvantage Direct 529 plan website and follow the life stage guide to calculate the best ways to optimize your account​. You can also contribute to your tax return as well as add some disappearing expenses (i.e. costs that are in a family’s budget for a limited time span) to the account. Another way to benefit from contributing to a 529 plan is by joining Upromise. With this membership, you’re earning cash back as you shop online, dine out, fill your gas tank, buy groceries, book hotels, and more. By linking your Upromise account to your CollegeAdvantage Direct Plan, your earnings are automatically transferred on a periodic basis, subject to a $25 minimum. If you sign up for automatic recurring contributions, you could transfer money from your bank account to the Ohio 529 plan.

    After considering every potential option available when opening a 529, you may even begin to wonder how others can help contribute to your child’s 529 savings plan. For example, after celebrating your child’s first birthday, you may look around to find toys scattered, some of which haven’t even been used. This brings up the question: Is there a better way to celebrate this milestone? The answer: Yes. Instead of receiving unnecessary toys from family members, consider asking for the gift of college by having loved ones contribute to your child’s 529 plan.
    Fact_Post2CAnOthersContribute

    Family and friends want to give meaningful gifts for your child’s milestones. By asking them to consider gifts for college in lieu of gifts at baby showers, birthdays, holidays, graduations, and many other special occasions, your child’s future will only continue to benefit. The first, and easiest, option for CollegeAdvantage Direct 529 plan gift contributions is through Ugift. Ugift makes it easy for an account owner to set up a code which will authorize gift givers to donate directly to a 529 plan online without needing the actual account number. They can even check to make sure their electronic contribution is securely transferred from their bank account by visiting Ugift529.com. It's that easy. Once a gift giver has the code, they can continue to make one-time or recurring electronic gifts for college without fees. Plus, if the gift giver is an Ohio taxpayer, they can also deduct up to $​4,000 in contributions per beneficiary, per year, from their state taxable income. Their gift contribution must be made payable directly to the account, not to the child.

    Have gift givers who may prefer paying by check? Simply encourage them to write a check payable to the Ohio Tuition Trust Authority, rather than the beneficiary, and give them the 11-digit account number to add to the memo line. ​You can then mail it with an Additional Contribution Form to the listed address and it will be added to your CollegeAdvantage Direct 529 Plan account. Again, if the gift giver is a taxpayer in Ohio, they can deduct their own gift contributions from their state taxable income.

    Another option to consider? Having heart-to-heart conversations with your child’s grandparents. It has been shown that a large number of 529 plan gift givers are grandparents who place a high value on higher education. After you talk with them, they may wish to make a gift to your existing 529 plan or they may want to establish their own account for your child. As the account owner, the grandparents will oversee the account and determine when to make withdrawals to pay for your child’s higher education expenses. They also control transfers between accounts, which is especially flexible if there is a need to transfer surplus funds from one grandchild to another. Or they can transfer their 529 account funds into an account that you’ve already established as college approaches.

    Grandparents who are Ohio taxpayers can take the deduction from their state income tax for gift contributions to CollegeAdvantage accounts of up to $​4,000 in contributions per beneficiary, per year. Make sure that your grandparents are aware that there are gift tax considerations that may come into play depending on the amount of the gift contributions. The current annual gift tax exclusion is up to $1​5,000 per person to each beneficiary, per year, but that amount is inclusive of all gifts to a beneficiary, not just gifts to a 529 account. Additionally, your child’s grandparents can use 529 plans as part of their estate-planning strategy. As this is a complicated area of tax law and strategies vary from person to person, please have them consult with a tax or financial advisor for information on this option.

    As the next celebration approaches, when family and friends ask what they can give, encourage them to give the gift of college by contributing to your CollegeAdvantage Direct 529 Plan.

  • Spring Clean Your Ohio 529 Plan

    by Amy Lyle | Mar 27, 2018

    Ah springtime! The weather improves, flowers start to bloom, and the tax season is almost over! As the outside world warms up, your thoughts might turn to spring cleaning. As you start your improvement projects around and outside the house, take the time to review your children’s 529 account as well. Ohio’s 529 Plan, CollegeAdvantage, can help.

    If you now have more than one child

    If you opened a college savings plan when your first child was born but haven’t yet for your newer arrivals, consider opening up their own individual 529 plans. Separate 529 plans for each child can maximize the tax benefits of saving for college in a 529 plan. These advantages include tax-free contributions and earnings, which means all investment is growth is yours to use, and tax-free withdrawals when used to pay qualified higher education expenses.

    Additionally, Ohio residents can deduct the Ohio’s 529 Plan contributions from their Ohio taxable income, up to $​4,000 per year, per beneficiary, with unlimited carry forward. So if you are an Ohioan with three Ohio 529 plans for your three children, you can maximize this tax benefit up to $​12,000 per year. Because of the unlimited carry forward for the state income tax deduction, it means that $​4,000 per year is not a contribution cap. If you have one 529 account and you’ve contributed $12,000, you will subtract $4,000 per year, per beneficiary, from your Ohio taxable income until all the 529 contributions have been deducted.

    Age-based saving strategies

    Has it been a while since you’ve opened your CollegeAdvantage account? It might be time to check out these savings strategies based on your children’s ages, especially if you’re not in a ready-made age-based portfolio. With a ready-made age-based investment option, the equity in a portfolio will automatically decrease as your child grows older; this reduces risk in the portfolio the closer the time comes to use the account to cover higher education costs.

    If you still have a baby or toddler, you’ve done a great job by already starting to save for their future higher education. When loved ones ask what gifts you’d like for your child, ask for the gift of a college education and share how they can add to your child’s account through Ugift. During kindergarten through elementary school, shift your disappearing expenses like diapers and day care costs to fund your child’s 529 plan. Those dollars you’ve prioritized for pre-K education can then support your child’s higher education. When your child enters middle school and high school, you may want increase your contributions to still maximize the power of compound interest to grow the account. Even if your child is about to start or has even started college, the benefits of tax-free earnings, tax-free withdrawals, and the state tax deduction for Ohioans can still build up the 529 account.

    Tools and calculators

    Curious if you’re on track with your college savings goals? CollegeAdvantage has tools and calculators to see how your 529 savings are adding up. With the college savings planner, you can receive an estimated monthly savings amount needed to reach your savings objectives. Change the planned contribution amount in this tool to see how setting aside a little more money can really add up. If you still considering opening a 529 plan to save for higher education costs, the tax benefit tool can show you how the tax benefits of a 529 plan can build the account when compared to a taxable savings account. The cost of waiting tool can ascertain how much more you may need to save to reach your college savings goals if you don’t start soon. Lastly, your asset allocation strategy is one of the most important decisions you’ll make. If you aren’t sure what level of risk you’re willing to take in your investment strategy, the risk tolerance questionnaire can determine your comfort level.

    Tax refund can fund your 529

    As mentioned earlier, tax season is almost over. If you’re receiving a tax refund, it will make a great contribution to your CollegeAdvantage account. The average 2016 federal tax refund was $2,697. By adding $2,700 a year to your Ohio 529 Plan over 18 years, you could cover over 40% of qualified college costs at an Ohio four-year public university. Like to see how much your yearly tax refund can grow your 529 account? Then use the college ​savings planner to calculate ​the savings. Every contributions, whether big or small, can really add up.

    As you’re enjoying the better weather, make sure to include your Ohio’s 529 Plan in your spring cleaning. Whether it’s performing account maintenance, starting automatic contributions to your 529 account, or updating account information, it’s great time to refocus on your college savings goals and your 529 account. An investment in a 529 plan is an investment in your child. Every dollar saved today is a dollar that doesn’t have to be borrowed which makes Ohio’s 529 college savings plan an excellent alternative to student loan debt. Ohio’s 529 Plan, CollegeAdvantage, is your plan, your way.

  • NYSE Will Be Closed Friday, March 30

    by Amy Lyle | Mar 21, 2018

    The New York Stock Exchange (NYSE) will be closed on March 30 for Good Friday. Any transaction requested on a holiday, weekend, or after the NYSE closes will be processed on the next business day.

    However, the office of Ohio’s 529 Plan will remain open on March 30. Our Customer Service department (1-800-AFFORD-IT) is happy to assist you from 8:30 a.m. to 6 p.m. ET on regular business days. You may also access your account online 24/7 to manage many 529 plan transactions.

    Please remember that any transaction requested while NYSE is closed will be processed the next business day, which is Monday, April 2.

  • Caps Off — Again — To Ohio’s 529 Plan

    by Amy Lyle | Mar 19, 2018

    Savingforcollege.com, a trusted 529 industry informational website which provides analysis and reviews of the nations’ more than 100 college saving plans, recently released its 5-Cap ratings for the fourth quarter 2017.

    Ohio’s 529 Plan, CollegeAdvantage, is only one of only five 529 college savings plan nationwide to earn a 5-Cap rating for both residents and non-residents. Ohio’s Direct 529 Saving Plan has received this recognition multiple times for the plan’s attractiveness for Ohioans as well as out-of-state residents.

    5-Cap rating criteria

    In order to receive a 5-Cap rating, Savingforcollege.com expects a program to “offer outstanding flexibility, attractive investment, and additional economic benefits (such as generous state tax incentives) that for some people, at least, will provide a substantial boost to their savings. There are few, if any, weaknesses noted in the program.”

    Savingforcollege.com bases these ratings on five criteria:

    1. Performance, which is taken directly from Savingforcollege.com’s quarterly performance rankings;
    2. Costs of running a college-savings plan, which includes expense ratios, administrator and managerial fees;
    3. Features such as a spectrum of age-based and risk-based portfolios as well as FDIC-insured options, participation in programs like Upromise and Ugift, and contribution restrictions;
    4. Reliability signals such as plan disclosure statements, the ease of making account changes, and the quality and experience of outside program managers; and
    5. Added upgrades for residents of plan’s sponsoring state.

    Ohio’s 529 Plan other rankings

    As mentioned in the criteria, investment performance is a contributing factor in the 5-Cap ratings. For the fourth quarter of 2017, CollegeAdvantage Direct 529 Plan ranked first in the nation for best performance in the three-year and five-year category. In the one-year performance category, Ohio’s Direct 529 Plan was ranked at eighth in the nation.

    Additionally, Savingforcollege.com listed Ohio’s 529 Plan as one of its best-rated 529 college savings program across the states.

    Other industry-trusted organizations has also highly regard Ohio’s 529 Plan. Kiplinger released its rankings for the best 529 college savings plans and the report recognizes Ohio’s 529 Plan as having best age-based portfolio for conservative investors. In addition, Kiplinger drew special attention to two of CollegeAdvantage’s individual investment options for conservative investors. Business Insider ranked CollegeAdvantage as the third best college savings plan in the nation. Morningstar, the leading provider of independent investment research, has named Ohio’s CollegeAdvantage Direct 529 Savings Plan one of the top 529 plans in the country by awarding a ‘silver’ rating for the seventh consecutive year. Bezinga, a website that offers financial insight, has named Ohio’s 529 Plan, CollegeAdvantage, as best for performance of the nation’s college savings plans.

    Tax benefits of saving in Ohio’s 529 Plan

    CollegeAdvantage helps families across the nation save money for their children’s future higher education costs with tax-advantaged benefits including tax-free earnings and tax-free withdrawals when requested to cover qualified higher education expenses. Additionally, if the CollegeAdvantage account owner is an Ohio resident, then they can deduct 529 contributions from their Ohio taxable income, up to $4,000 per year, per beneficiary, with unlimited carry forward. To be clear, $4,000 per year is not a contribution cap. The taxpayer can continue to subtract $4,000 per year, per beneficiary, from their Ohio taxable income until all the 529 contributions have been deducted.

    Use at almost any school across the nation

    Saving in Ohio’s 529 Plan does not mean that those college savings can only be used at an Ohio post-secondary school. Your CollegeAdvantage 529 plan can pay for qualified expenses at any federally accredited school nationwide, including two-year, four-year, graduate or technical schools.

    Tools and calculators

    Ohio 529 Plan has calculators and tools for you to shape the 529 plan to best fit your family’s needs.  Would you like to receive an estimate on your child’s projected college costs and what monthly 529 plan contribution can help you reach a saving goal. Then add the requested information to the college savings planner for an estimation. The cost of waiting tool can approximate how much more money you will need to be set aside if you postpone saving for higher education costs. The tax benefit tool illustrates the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account. If you aren’t sure how much risk-taking you are comfortable, answer the risk tolerance questionnaire to discover your tolerance for risk to determine an investment strategy best suited to you.

    Saving strategies

    You can review your investment strategies based on your child’s life stage with CollegeAdvantage. If your child started kindergarten, you have more time to benefit from the power of compound interest. If your child is in middle or high school, you may want to accelerate your savings. Even if your child is in college, you can still take advantage of tax-free earnings (which helps you save even more) and you can maximize the Ohio tax deduction, too.

    There’s a lot to celebrate when you save for your children’s future higher education expenses with Ohio’s 529 plan, CollegeAdvantage. It’s far cheaper to save for college now and earn interest in an 529 account than pay off students loans with accumulated interest later. With all benefits offered with a 529 plan, your green can grow to reach your college savings goal. Ready to start with CollegeAdvantage? It’s easy to open an account online. CollegeAdvantage is your plan, your way.

  • Save Your Green With Ohio’s 529 Plan

    by Amy Lyle | Mar 14, 2018

    Is green your favorite color? Ohio’s 529 Plan, CollegeAdvantage, wants to help you hold onto more of your green, especially when you’re saving it for your children’s future higher education costs. A 529 college savings plan has many benefits that can help.

    529 plan tax advantages

    A considerable benefit of saving for college in a 529 plan is its tax advantages, which include tax-free earnings, tax-free withdrawals, and State of Ohio tax deduction for residents of Ohio only. These tax advantages can help you save even more of your green.

    While saving in Ohio’s 529 Plan, any earnings that can build up the account will be tax-free. This means all the investment growth is yours to use for your children’s future college costs. Compound interest, which is the interest earned on contributions, earnings, and interest already accumulated in the 529 account, is included in the tax-free earnings. To see just how tax-free growth adds up with a 529 savings plan, use the tax benefit tool and immediately see the difference between a 529 plan account and a taxable savings account.

    Withdrawals from a 529 plan used for qualified higher education expenses are also tax-free for federally accredited programs. These costs include tuition; room and board when your beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment needed for enrollment and classes; and certain expenses for a special-needs student. Room and board costs also include rent for off-campus residency and groceries (non-taxable items only), provided these costs are equal or less than the same room and board allowances from the accredited school. For tax purposes, the burden of proof for qualified expenses and withdrawals is placed on the account owner. Make sure to retain all documentation of your beneficiary's room and board costs and other 529-qualifed expenses.

    Any Ohio resident — whether the account owner or a gift giver — who contributes to Ohio’s 529 Plan, CollegeAdvantage, can deduct their contributions from their taxable state income. Effective Jan. 1, 2018, the deduction is now $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all Ohio 529 Plan contributions have been deducted.

    Ready-made investment options

    To save your green, you can tailor a 529 college savings account to your family’s needs. Ohio’s 529 Plan, CollegeAdvantage, offers a wealth of 529 investment options, from leading investment managers VanguardDimensional Fund Advisors, and Fifth Third Bank. The investments include ready-made age-based portfolios and ready-made risk-based portfolios. These ready-made investment options are simple to use for each portfolio’s asset mix and allocations are pre-determined. When your beneficiary is younger, the asset allocation mix includes more stocks. As your beneficiary grows older, the asset allocation mix adjusts to reduce the amount of equity and increase the amount of conservative investing vehicles, such as fixed-income and cash preservation options.

    Not sure what investment options fit your investment personality best? Answer our risk tolerance questionnaire to determine with which asset allocation mix you would be most comfortable – conservative, moderate, or aggressive.

    Also, Ohio’s 529 Plan has savings strategies to determine if you should modify your 529 college savings account based on your child’s age. If your child just started kindergarten, you have longest amount of time to save as well as benefit from the power of compound interest. If your child is in middle or high school, you may want to increase your college savings contributions.

    Ease of automatic deposits

    Another simple way to save your green is to set up automatic deposits to your CollegeAdvantage account. Many families find it’s best to have contributions automatically transferred to their 529 plan before the funds are used for other expenses. Electronically transferred 529 contributions can be scheduled to match paycheck deposits or to another monthly contribution schedule.

    Some employers offer payroll deduction, where a portion of your paycheck can be deposited directly into a CollegeAdvantage Direct 529 account. You can log in to your account to establish payroll deduction through direct deposit or complete and mail a payroll deduction form. Please note that a Fifth Third Certificate of Deposit (CD), which requires a $500 minimum contribution to open, is not available for purchase through automatic recurring contributions or payroll deduction.

    Another way to boost your 529 college savings plan is to contribute federal and state tax returns, pay raises, or bonuses to your 529 account. The average tax return is $2,697. By adding $2,700 annually to a 529 plan over 18 years, you could cover over 40% of college costs at an Ohio public university.

    Save your green for ​higher education costs

    Why save your green in Ohio’s 529 Plan? It’s far cheaper to save for college now and earn interest in an 529 account than pay off students loans with accumulated interest later. With all benefits offered with a 529 plan, your green can grow to reach your college savings goal. Ready to start with CollegeAdvantage? It’s easy to open an account online. If you already have an account and want to make some changes, log in to update account information, perform maintenance, or increase your automatic deposits. CollegeAdvantage is your plan, your way.

  • Saving For Education Is Simplified In 2018

    by Amy Lyle | Mar 08, 2018

    I​n support of America Saves, CollegeAdvantage welcomes the opportunity to run the following guest blog from Invite Education.

    The recent tax bill expands 529 savings plans to include expenses for elementary and secondary education. And the annual gift tax exclusion has increased. This is big news for education savers – no matter how much you are saving!

    Congress wanted to make it easier to save for education. Traditionally, 529 plans have been used to cover college costs only, making 529 savings plans the go-to option to save for college for many families.

    The new tax bill allows 529 plan distributions of up to $10,000 annually to pay for private school tuition all the way through the senior year of high school. This would include religious and parochial institutions.

    “This expansion of the 529 plan is a net positive for families saving for higher education as it opens flexible options for tax-advantaged savings towards high school tuition as well.” said Peter Mazareas, a member and former chairman of the College Savings Foundation.

    The other benefits of 529 plans remain unchanged. Earnings are accumulated tax-free each year, and distributions from the accounts for qualified educational expenses are also made free of tax. These tax-free savings and distributions help build a larger education savings nest egg and help reduce the amount borrowed for college.

    States and national program managers offer 529 plans, often sold directly by the states (direct-sold plans) or through financial advisers (adviser-sold plans)

    In addition to the federal tax benefits, you should also consider these factors:

    State tax advantages: Many states offer deductions for qualified contributions. However, take a closer look at any restrictions. Some states require residents to use an in-state plan to qualify for deductions.

    Fees and performance of investment options: As with any investment plan, it is important to pay attention to the fees and to the risk/return given the time frame for saving. Many plans offer age-based investment options to reduce the risk of principal loss as students get closer to college age.

    More information on the program in your state can be found at SavingforCollege.com.

    Some education savers may also take advantage of the increase in the annual gift tax exclusion. Taxpayers can now make tax-free gifts up to $15,000 ($30,000 for joint filers). If you have the means, consider taking advantage of a unique 529 plan benefit: you can lump-sum, super-fund a 529 plan with five years of gifting. Up to $75,000 can be bundled without gift taxes and put into a 529 plan, making it easy to transfer to relatives and help pay for future expenses. Once making the maximum bundled gift of $75,000, the contributor would have to wait five years before making additional gift contributions without penalty.

    These changes are intended to encourage saving for education. But, the most important step remains the same: begin saving today. Consistently saving – even small amounts – over long periods of time allows a basic concept of finance, compounding, to work in your favor. Compound interest is the additional amount earned on previous interest. For example, if you have $100 in the bank and earn 3 percent interest, after 1 year you will have $103 if the interest compounds annually (aka simple interest). If it compounds every day, you will have $103.05. At the end of the second year, you will have $106.09 with annual compounding and $106.18 with daily compounding. The point is to illustrate that earning interest on interest grows savings as quickly as possible.

    Another related basic rule of finance is that savings will double when the number of year times the interest rate approximately equals 70. For instance, in 10 years at a 7 percent interest, a $100 investment would be valued at $201.36, compounded daily. Taking advantage of compound interest can help grow education savings and reduce future college debt.

    Finally saving for education is getting easier as crowd-funding opportunities are used. Many 529 plans have programs to permit relatives and friends to contribute to a student’s 529 education savings account. Also, be on the lookout for national programs such as Gift of College, which can now be found at retail outlets such as Toys R Us and Babies R Us. Friends and relatives can purchase these gift cards online or in stores to contribute to a student’s college savings.

    All of these programs are designed to make saving for education easier with the hope of reducing future student debt. Remember: Saving a dollar today is better than borrowing one tomorrow.

    Invite Educationa company dedicated to providing the information, tools, and services families need to effectively plan and pay for collegesubmitted this blog for America Saves Week 2018.

  • Save In A 529 Plan While Your Child Is In College

    by Amy Lyle | Mar 06, 2018

    Unless your child is graduating from college this spring,  it’s never too late to save for college. Even if your child is currently attending a two-year, four-year, graduate, vocational or professional school, you can still save in a 529 plan. Why? The tax benefits are still available to grow the college savings account with Ohio’s 529 Plan, CollegeAdvantage.

    Tax advantages of still saving in the 529 plan

    First, you can still take advantage of tax-free earnings. This means all the investment growth, even short-term growth, is yours to use to cover college costs.

    Second, withdrawals to cover qualified higher education expenses are tax-free at federally accredited programs. These expenditures include tuition; room and board when the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student. Room and board costs can also include rent for off-campus residency and groceries (non-taxable items only), provided these costs are equal or less than the same room and board allowances from the accredited school. As is the case with all 529 college savings plans, the burden of proof for tax purposes for qualified expenses and withdrawals is on the account owner. Retain all documentation of your beneficiary's room and board and other 529-qualifed expenses.

    Third, an Ohio resident who saves in Ohio’s 529 Plan, CollegeAdvantage, can deduct their contributions from their taxable state income. Effective Jan. 1, the deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all Ohio 529 Plan contributions have been deducted.

    Contributions must remain in account for set period of time

    However, the funds you contribute to your 529 plan must remain in the account for at least seven business days before they can be used to cover college costs. This allows all the funds to clear any regulatory concerns.

    How to make withdrawals for post high-school expenses

    If you’re still saving in your child’s 529 plan while they are in college, eventually you will need to draw on those funds to cover their higher education expenses.  When it’s time to make a withdrawal to pay college costs, first make sure your account information is current.

    Account updates and two-factor authentication

    Ohio’s 529 Plan applies two-factor authentication to all 529 accounts, which enhances the security of online access. This process protects valuable account information by allowing financial institutions to double-check their online account users’ identities.

    As a CollegeAdvantage Direct 529 account owner, you will need to take two steps to verify your identity. First, log in  as normal with the account number and password from a private computer or other secure device. Then you will account owner will then select how to receive the PIN (Personal Identification Number) – by text, phone, or calling CollegeAdvantage’s Customer Service Department. Upon receipt of the PIN, you will have five minutes to enter the code. Once the PIN has been entered from your computer or other secure device, there’s an option to mark the device as trusted. In order to keep the account secure, this process will be repeated during the life of the account.

    While logged into the 529 account, update your bank’s information if needed. For security purposes, no withdrawals will be processed unless your bank information has been on file for at least 15 business days. This is a one-time waiting period when you change your banking information. To add your current bank account details, go to the “Asset Management” menu to add your bank information in the “Manage Banks” section.

    Online withdrawals and payments

    Online withdrawal requests followed by online tuition payments to the school are the fastest way to move money from your CollegeAdvantage 529 account to an eligible education institution. While logged into the college savings plan, request that your withdrawal be sent directly to the post-secondary education institute, your bank account, or to the account beneficiary’s bank account. Withdrawals requested before 4 p.m. EST on business days will be processed in three business days. If you opted to have the withdrawn funds to be sent to your, or the beneficiary’s bank account, it may take additional time for the bank to show the 529 withdrawal as deposited.

    If you elected for the withdrawal to go directly to the school, make sure to provide the correct student ID number and the correct school address on the withdrawal form. CollegeAdvantage does not provide school addresses. Then use the college’s online portal to pay your child’s college costs. Processing times will vary by school; ask the bursar’s office what a good time period would be to start the withdrawal process so you can avoid late penalties.

    You can also opt to have the withdrawal sent electronically to your bank account. From the date of your request, you can expect the funds to be at your bank within three to five business days. Use the school’s online portal to pay the higher-education expenses from your bank account. Most schools have their own electronic tuition payment process as well as other traditional methods. Check your school’s bursar office for details. Processing times will vary by school.

    Ohio’s 529 Plan can also send the online withdrawal directly to the school via a paper check by U.S. mail. Depending on the U.S. Postal Service’s delivery schedule as well as the school’s paper check processing procedures, this may cause delays in the payment. For the paper check, you must provide the correct school address, your student’s school ID number so the school knows to whom to credit the payment. You should allow at least an additional 10 business days after the date of your online withdrawal request for the check to arrive at the school. It will also take the school additional time to apply the payment to your student’s expenses.

    No matter if your child is heading to college this fall or is currently in college, continue to save in your 529 plan to maximize all its tax advantages. CollegeAdvantage is your plan, your way.

  • Blue Jackets & Ohio’s 529 Plan Team Up For The College Savings Assist

    by Amy Lyle | Mar 01, 2018

    The Columbus Blue Jackets and Ohio’s 529 Plan, CollegeAdvantage, have teamed up for the College Savings Assist! One lucky family will receive a $10,000 college savings award. Use this assist to boost your 529 college savings account or score big for an already established 529 plan.

    A second-place winner will score a visit by Stinger to their child’s school, provided the school is located in Franklin and all contiguous counties. Eight runner-ups will receive autographed Blue Jackets memorabilia.

    To enter to win, visit our giveaway on Facebook. You can enter once per day, per e-mail address. This giveaway ends at 11:59 p.m. ET Sunday, March 25.

    The grand-prize winner check presentation will be held on the center ice of Nationwide Arena before the 7 p.m. Tuesday, April 3, game against the Detroit Red Wings.

    Don’t wait to enter! This college savings sweepstakes won’t go to a shootout.

  • Ohio’s 529 Plan First In Nation Again

    by Amy Lyle | Feb 27, 2018

    There can be many contributing factors that can grow a 529 college savings account. Long-term investment performance, automatic contributions, compound interest, and tax advantages are some of the main agents for this growth.

    Savingforcollege.com, a trusted college-savings industry resource, provides research on 529 plans, financial aid, scholarships, and tools to estimate college expenses. Savingforcollege.com also analyzes the performance of the nation’s 529 plans on a quarterly basis and ranks them based on that performance. Ohio’s 529 Plan, CollegeAdvantage, consistently receives high ranks for its long-term investment performance.*

    Ohio’s 529 Plan rankings

    Based on the performance rankings of Dec. 31, 2017, CollegeAdvantage Direct 529 Plan continued to be rated in first place nationwide for the best performance in the three-year and five-year categories. Additionally, Ohio’s 529 Plan, CollegeAdvantage, is ranked eighth in the nation for the one-year performance. **

    Savingforcollege.com also recognizes Ohio’s 529 Plan as one of the best 529 plans for 2018, as well as a top option for conservative investors. Ohio’s 529 Plan is proud to receive all these high marks as we strive to offer the best 529 plan possible for all forward-thinking parents who want to save for their children’s future college costs.

    As long-term investment performance is a crucial component in building a 529 account, other key elements also contribute to a 529 plan’s growth: tax advantages, regular contributions and compound interest.

    529 plan tax advantages

    Families across the nation save with CollegeAdvantage, Ohio’s 529 Savings Program, for their children’s future college, vocational, trade, or technical school costs.  Why? For the tax-advantaged benefits. First, all contributions and earnings grow tax-free in a 529 plan, so all investment growth is yours to use to cover college costs. Second, a 529 withdrawal is tax free when used to pay qualified higher education expenses — the mandatory costs for attendance at a post-secondary education institute. Third, a CollegeAdvantage account owner who is an Ohio resident can deduct their 529 contributions from their state taxable income. The deduction is now $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 per year is not a contribution cap. If an Ohio taxpayer contributes $12,000 in one tax year, they will continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions have been deducted.

    Automate your 529 contributions

    What’s the easiest way to save for college? Automate your 529 plan contributions. We’ve heard from 529 plan account owners that the key is to invest regularly in the 529 plan before there is a chance to spend the funds elsewhere. You can align these automated 529 plan deposits with your paydays or a monthly contribution schedule. To set up a contribution schedule, log in to your 529 account and select “Automatic Investments” from the Asset Management menu to schedule recurring contributions. Even small investments can add up to big savings over time through regular automatic contributions or payroll deduction.

    Compound interest

    A great reason to start a 529 college savings fund as early as possible to take full advantage of the power of compound interest. Compound interest is earnings gained on contributions, earnings, and interest already accumulated in the 529 account. The longer a college savings plan has time to develop, the longer compound interest can add the 529 account.

    While compound interest in a 529 college saving plan is a huge advantage, compound interest with student loans is a huge disadvantage. This is why 529 plans are a great alternative to student loan debt, which currently stands at $1.3 trillion held by 44 million borrowers in America. By saving now in an Ohio’s 529 Plan and earning interest, you can avoid paying student loans later with interest.

    Additional help with our tools and calculators

    Ohio’s 529 Plan offers calculators and tools to help you create the 529 account that best suits your family’s needs. The college savings planner can estimate projected college costs and provide a monthly saving goal. The cost of waiting tool can approximate how much saving early can help and what steps you can take to catch up if you started later. The tax benefit tool shows the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account.

    Ohio’s 529 Plan, CollegeAdvantage, also provides 529 account strategies shaped by your child’s life stage. It is a fantastic time to start saving for future college expenses when your child is a baby to toddler, so to take advantage of compound interest. During kindergarten through elementary school, disappearing expenses like day care costs can be shifted to fund the 529. When your child enters middle school and high school, you may want to increase your contributions. Tax-free earnings, tax-free withdrawals, and the state tax deduction for Ohioans can still boost up the 529 account even if your child is in college.

    The CollegeAdvantage Direct 529 Plan offers a variety of investment options — from ready-made, age-based or ready-made, risk-based portfolios, individual investment vehicles, and FDIC-insured banking options. We’ve partnered with leading investment managers VanguardDimensional Fund Advisors, and Fifth Third Bank to provide these 529 investment options. As noted above, Savingforcollege.com recognized our FDIC Fifth Third investment options.

    Saving for college in Ohio’s 529 plan does not mean that those funds can only be used in Ohio. 529 plans can be used nationwide at any accredited two-year, four-year, graduate or professional, or any other post-secondary schools that accepts federal financial aid.

    Open an Ohio 529 Plan to save for your child’s future training and education. An investment in a 529 plan is an investment in your child. Remember, every dollar saved today is a dollar that doesn’t have to be borrowed. CollegeAdvantage is your plan, your way.

    *The performance data shown represents past performance, which is not a guarantee of future results.

    **Due to a portfolio alignment change by Savingforcollege.com, one of the CollegeAdvantage Direct 529 Plan portfolios is not currently included in 10-year performance investments. This change moved Ohio’s 529 Plan to the “N/A” category at the 10-year level. Previously, CollegeAdvantage Direct 529 Plan 10-year performance ranking was second in the nation for the second quarter 2017.

  • See How Much Your Tax Refund Can Build Your 529 Plan

    by Amy Lyle | Feb 21, 2018

    Your federal tax refund can make a great ​contribution to your CollegeAdvantage account. It’s also a smart and easy saving strategy. The average 2016 federal tax refund was $2,697. By adding $2,700 a year to your Ohio 529 Plan over 18 years, you could cover over 40% of college at an Ohio four-year public university.

    College Savings Planner Tool

    Would you like to run the numbers with your federal tax refund? Ohio’s 529 Savings Program offers a college savings planner to calculate how much you can save by contributing your tax refund every year. Additionally, you can use the tool to see what your estimated 529 account total could be if you deposited monthly automatic contributions, as well as increased the dollar amount or the frequency of 529 contributions. Every amount contributed, whether big or small, can help you reach your savings goal.

    529 Plan Tax Advantages

    Keep in mind, if you deposit your tax refund or other contributions into your CollegeAdvantage 529 plan, there are many tax benefits.

    First, all earnings in a 529 plan are tax-free, so all investment growth is yours to cover college costs.

    Second, 529 plan withdrawals to cover qualified higher education expenses are tax-free at federally accredited programs. These expenditures include tuition; room and board (on and off campus) when the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student.

    Third, Ohio residents who contribute to Ohio’s 529 Plan, CollegeAdvantage, can deduct their contributions from their taxable state income. Effective Jan. 1, the deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward. Remember $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions are deducted.

    Setting Savings Strategies

    The tax season is also an excellent time to assess your progress on your college savings goals or set your college savings goals! CollegeAdvantage offers tools to help you build a 529 plan that best fits your family’s needs. You can determine your college savings goal or see the cost of waiting to save. Also, review your investment strategies based on your child’s life stage. If your child just started kindergarten, you have more time to benefit from the power of compound interest. If your child is in middle or high school, you may want to accelerate your savings. Even if your child is in college, you can still take advantage of tax-free earnings (which helps you save even more) and you can maximize the Ohio tax deduction, too.

    Ready to open an account with Ohio’s 529 plan? Visit CollegeAdvantage online to save for future college expenses today. Every dollar saved today is a dollar that doesn’t have to be borrowed which makes Ohio’s 529 college savings plan an excellent alternative to student loan debt. CollegeAdvantage is your plan, your way.

  • There’s A Lot To Love About 529 Plans

    by Amy Lyle | Feb 14, 2018

    On this Valentine’s Day, fall in love with 529 plans. If you have dreams of a college education for your child, a 529 plan can help you make them a reality. With your dedication to your dream coupled with all the advantages of saving for college in a 529 account, it becomes a powerful combination. Here are four facts to fall for with Ohio’s 529 Plan, CollegeAdvantage.

    Fall For 529 Plan Tax Advantages

    Ohio’s 529 Plan, CollegeAdvantage, helps families across the nation save money for their children’s future college costs with tax-advantaged benefits. First, all contributions and earnings grow tax-free in a 529 plan, so all investment growth is yours to use to cover college costs. Second, a 529 withdrawal is tax free when used to pay qualified higher education expenses — those costs that are mandatory to attend the school. Third, a CollegeAdvantage account owner who is an Ohio resident can deduct their 529 contributions from their Ohio taxable income. The deduction is now $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 per year is not a contribution cap. If an Ohio taxpayer contributes $8,000 in one tax year, they will continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions are deducted.

    Fall For “Save Here, Go Anywhere” 529 Plans

    Just because you saved in Ohio’s 529 Plan, it does not mean that your child needs to attend an Ohio school. Your 529 college savings plan can be used nationwide at any federally accredited educational institutions – whether for an associate, bachelor’s, graduate, professional, or vocational degree. You can use your account almost anywhere you’re comfortable sending both your student and your money.  If the school has a Federal School Code on the Free Application for Federal Student Aid or FAFSA, then the withdrawals to cover qualified higher education expenses at that school will be tax-free.

    Fall For The Power of Compound Interest In 529 Plans

    It’s never too late or too early to start saving for your child’s future college costs. Any funds you can set aside in a 529 account is money your child won’t have to borrow for their education. However, a good reason to start a 529 college savings fund as early as possible is to take full advantage of the power of compound interest. Compound interest is interest gained on contributions, earnings, and interest already accumulated in the 529 account. It’s a dynamic tool to build a 529 plan. The longer a college savings plan has time to develop, the longer compound interest can add the 529 account.

    While compound interest in a 529 college saving plan is a huge advantage, compound interest with student loans is a huge disadvantage. By saving now with Ohio’s 529 Plan and earning interest, your child can avoid paying student loans later with interest. This is why 529 plans are a great alternative to student loan debt.

    Fall For Tools To Shape A 529 Plan To Your Family’s Needs

    To help you build the 529 account that meets your family’s college savings goals, Ohio’s 529 Plan offers calculators and tools. The college savings planner can assess the projected college costs and provide you an estimated monthly saving goal. The cost of waiting tool can approximate how much money may need to be saved if you have a late start. The tax benefit tool shows the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account. There’s even a tool to discover with what level of investment risk with which you’re comfortable.

    Ohio’s 529 Plan, CollegeAdvantage, also provides 529 account strategies, which are shaped by your by your child’s age. If your child is a baby to toddler, it is a fantastic time to start saving for future college expenses to take advantage of compound interest. During kindergarten through elementary school, disappearing expenses like day care costs can be shifted to fund the 529. When your child enters middle school and high school, you may need to increase your contributions. Even if your child is about to start or has even started college, the tax-free earnings, tax-free withdrawals, and the state tax deduction for Ohioans can still build up the 529 account.

    Additionally, you can simplify saving for your child’ future college costs with automatic recurring contributions. In planning to make consistent contributions  to a 529 plan, it can be part of your budget and you don’t need to be concerned that you might spend the funds elsewhere. You can align 529 plan deposits with your paydays or schedule monthly contributions. Even small investments can add up to big savings over time through regular automatic contributions or payroll deduction.

    Valentine’s Day — or any day — is a great day to show your love to your children and their dreams. Open an Ohio 529 Plan to save for your child’s future training and education. An investment in a 529 plan is an investment in your child. Remember, every dollar saved today is a dollar that doesn’t have to be borrowed which makes Ohio’s 529 college savings plan an excellent alternative to student loan debt. Ohio’s 529 Plan, CollegeAdvantage, is your plan, your way.

  • Ohio 529 Plan's Office Closed President's Day, Feb. 19

    by Amy Lyle | Feb 12, 2018

    The office of Ohio’s 529 Plan will be closed on Monday, Feb. 19, 2018, in observance of Presidents’ Day.

    Our Customer Service department (1-800-AFFORD-IT) will be closed on this day. Customer Service representatives are available to assist you on regular business days from 8:30 a.m. to 6 p.m. ET before or after a specific holiday. However, you always have access to your 529 account online 24/7.

    The New York Stock Exchange (NYSE) will also be closed for the holiday. Any transaction requested on a holiday, weekend, or after the NYSE closes will be processed on the next business day.

    If you are interested in learning more about Ohio and its role in the U.S. presidency, read more here.

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