• Who Controls The 529 Account?

    by Amy Lyle | Apr 28, 2016

    Who controls the 529 account? The answer is simple: the account owner. There are two distinct parties involved in a 529 plan — the account owner and the beneficiary.

    The account owner is the person who opens the 529. As the account owner, this person manages the college saving plan: selecting or changing the beneficiary, selecting the investment options, making withdrawals, terminating the account, and receiving withdrawals if no other person is designated. The account owner also makes contributions to the account, but others can help, too.  Anyone can contribute to an already established 529, but only the account owner controls and sees the assets within it. 

    The account owner, typically a parent, opens the account for the designated beneficiary, typically their child. However, grandparents, other relatives, and friends are all potential CollegeAdvantage 529 plan account owners. The account owner does not have to be related to the beneficiary. The owner designates the beneficiary, sets investment allocations, and, ultimately, controls withdrawals from the account.

    If the account owner is not the beneficiary’s parent, the owner can also change account ownership at a later date, if needed, to a parent or another owner. When the account is opened, the account owner should also a select a successor owner, someone who can assume management of the account in the event of the account owner’s death or incapacity.

    The beneficiary is the person whose future qualified higher education expenses may be paid from the account. While the beneficiary enjoys the advantages of having a 529 college savings plan, they have no managerial authority over it. There is one exception to this – when the account owner is also the beneficiary of the fund – in the case of an adult returning to pursue an advanced degree, an alternative degree, or continuing education.

    Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) accounts work differently. For additional information about UGMA/UTMA accounts, please read page 7 of the CollegeAdvantage Direct Plan Offering Statement.

    With 529 plans, it is the account owner who controls the savings for their chosen beneficiary. Are you ready to become a CollegeAdvantage 529 plan account owner for one of your loved ones? Visit here to sign up today.

  • My Best Advice: Start Saving Early

    by Amy Lyle | Apr 25, 2016

    In April 2015, CollegeAdvantage celebrated its 25th anniversary. In honor of this milestone, many longtime account owners shared their Saving Stories and how using CollegeAdvantage helped them achieve their goals. We are fortunate to have these encouraging stories of how families prioritized their children’s higher education and are sharing them. 

    We had a very good experience with CollegeAdvantage. I believe I owe our success with saving for college to the example set by my parents. When I was growing up, they started a savings account for my education when I was very young, so that is what I did for my children.

    I was fortunate that CollegeAdvantage was just starting out, and I heard about it from a friend. We had started savings accounts for both children shortly after they were born. Any monetary gifts they received when they were born, or for birthdays and holidays, had gone into those savings accounts. So, we had nest eggs to start their CollegeAdvantage accounts.

    My best advice to save for college is to start very early when they are babes in arms and to add to it on a regular basis. It was so nice not to have to worry about how we were going to pay the next tuition bill. 

    Our daughter, Katie, went out of state at first for college. She attended The Boston Museum School of Fine Arts and Boston University. She completed her education at The Ohio State University and majored in Fine Arts and Psychology. She then went back to Boston University and completed a program to become a CERTIFIED FINANCIAL PLANNER TM. She currently is employed by The Wealth Conservancy in Boulder, Colorado.

    Our son, Ben, graduated from The Ohio State University. He majored in Environmental Science and currently lives in Bowling Green, Ohio, and works for UPS.

    If you make it a practice to set aside so much per paycheck, it becomes a habit. I remember taking the tour of the main campus at Ohio State with my daughter. At the end of the tour, they ushered us directly into a financial aid cubicle. After about a minute, we were told we did not need to be there. What a great thing to hear. Our plan worked and was well worth it. Our son had the same advantage a few years later!

    I hope that others hear about CollegeAdvantage, too, so that they can save for their children’s education like we did.

    Shirley Wolf

    Lima, Ohio

  • Reds Tickets Giveaway Winners Announced

    by Amy Lyle | Apr 22, 2016

    Spring and baseball go together like hand in glove; so do the Cincinnati Reds and CollegeAdvantage. For the third season in a row, the Reds and CollegeAdvantage are partners to promote college savings at Great American Ball Park. As a sponsor of Family Sunday for this upcoming Super Hero Weekend, CollegeAdvantage held a Facebook giveaway of four sets of four-ticket packages to the April 24 Reds game against the Chicago Cubs.

    There were over 590 entries and the lucky winners were randomly selected. They are:

    James Boersma, Bedford, Ohio

    Krissy Laubrends, Maineville, Ohio

    Chris Winiecki, Delaware, Ohio

    Mary Wright, Haskins, Ohio

    Additionally, one of our Saving Story account owners, Lora Warwar of Miamisburg, Ohio, was randomly selected to represent CollegeAdvantage at this game by throwing out the first pitch. Interested in sharing your savings story? E-mail us today!

    Would you like to see your name on a winners’ list from CollegeAdvantage? Check out the Reds Heads Kids Club. Kids Club members can enter to win one of several $529 college savings awards throughout the season. The next drawing will be held in early May. And, be sure to check out our CollegeAdvantage Blog at the beginning of May as we launch our month-long giveaway for 529 Day!

  • Almost Anyone Can Open A 529 Plan

    by Amy Lyle | Apr 21, 2016

    529 plans can be started by almost anyone (who is a U.S. resident and 18 or older) who wants to save for a child’s future college expenses. Parents, grandparents, aunts, uncles, godparents, friends, and even the students themselves (especially adult learners) – all are potential CollegeAdvantage 529 Plan account owners. You don’t have to be related to the beneficiary to open an account for them.

    Typically, account owners are the parents of the beneficiary. A parent can set up a 529 plan account at any point in the child’s life and can follow different saving strategies at each educational milestone. For parents, there are definite tax benefits for opening a CollegeAdvantage plan. First, if the account owner lives in Ohio, they can qualify for up to a $2,000 deduction from Ohio income tax for their contributions to CollegeAdvantage. This annual deduction can be taken for contributions for each beneficiary. This tax deduction isn’t a cap on annual contributions. Deductions for contributions over $2,000 can be carried forward to future tax years until fully deducted. Second, the 529 plan account will also grow tax-free. Third, withdrawals for 529-qualified higher education expenses will be free of federal and state income taxes. Fourth, if the original beneficiary decides not to pursue a college degree, there are no tax consequences for rolling over the account to another family member as defined by 529 laws.

    A second popular category of 529 plan account owners are grandparents. Many grandparents place a high value on education, and are often willing to set up 529 plans themselves or to make gift contributions to a grandchild’s existing account. As the account owner, the grandparent oversees the account and determines when to make withdrawals to pay for their beneficiary’s higher education expenses. Grandparents who own accounts also control transfers between accounts, which is especially flexible if there is a need to transfer surplus funds from one grandchild to another.  

    The same tax benefits for parent-owned accounts apply to grandparents, even if the beneficiary isn’t an Ohio resident! Grandparents who are Ohio taxpayers can take the deduction from state income tax for gift contributions to CollegeAdvantage accounts using the same parameters as parent contributions. Be aware that there are gift tax considerations that may come into play depending on the amount of your gift contributions. The current annual gift tax exclusion is up to $14,000 per beneficiary, per year, but that amount is inclusive of all gifts to a beneficiary, not just gifts to a 529 account. Additionally, 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 consult with a tax or financial advisor for information on this option.

    No matter who owns the account, anyone else can contribute to an existing CollegeAdvantage account. For birthdays, holidays, graduations (from preschool to kindergarten to high school) and other special celebrations, family, and friends can give the gift of college by contributing to a child’s CollegeAdvantage account. If the gift giver is an Ohio taxpayer, they too can deduct their own contributions from their Ohio taxable income. But to do so, the gift contribution needs to be made payable directly to the account (Ohio Tuition Trust Authority), not to the child.

    529 plans are a component in determining need-based federal financial aid. Who owns the account will determine the treatment of the 529 funds in the financial aid calculations. It is important to understand how ownership impacts need-based aid formulas. To read more on this subject, go here.

    So yes, anyone can open a 529 plan for their loved ones. If you are ready to start saving with CollegeAdvantage, it’s easy to open an account online here.

  • College Seemed So Far Away

    by Amy Lyle | Apr 18, 2016

    In April 2015, CollegeAdvantage celebrated its 25th anniversary. In honor of this milestone, many longtime account owners shared their Saving Stories and how using CollegeAdvantage helped them achieve their goals. We are fortunate to have these encouraging stories of how families prioritized their children’s higher education and are sharing them. 

    When this program first started I was little skeptical, but was quickly assured that this program would be of great benefit to both of my children. I signed my daughter up at age 2 and my son at under 1 year and have never regretted this decision. I only wish that I would have put more money into the program while they were growing up, but college always seemed so far away and I thought I would have plenty of time to save.

    My daughter graduated from Indiana University with a BS in Geology ​two years ago. (Where does the time go!)  When she graduated from high school, she was not going to register for college. I convinced her to take some classes at the local college before she gave up on going to college altogether.  She agreed. After giving college a try, and partly because she knew that we had the college fund set up for her, she continued her education. The CollegeAdvantage program along with her scholarships and financial aid paid for the majority of her college education. Without this program, she would have graduated with a lot of student loan debt. So, it was a blessing for her. 

    My son also tried college which I convinced him to do, since he also had a fund set up for him. He did not continue, but at least he was able to give it a try. Without the college fund, I don’t think that he would have even tried.

    My experience with the program has been wonderful, and I recommend it to all of my friends and family.  The communication from CollegeAdvantage was wonderful and my experiences on the web and on the phone with customer service were always excellent. I was concerned that there would be issues since we moved to Indiana when my children were young, but I continued to contribute and when it came time to make withdrawals for Indiana and Kentucky colleges, there was never an issue. I was also quite happy to see how my small contributions each month added up.

    Julie Szymanski

    Jeffersonville, Indiana  

  • Scholarship? Here’s How To Still Use Your 529!

    by Amy Lyle | Apr 14, 2016

    Congratulations! Your child worked hard through all the challenges of high school and has earned a scholarship to their dream school. And congratulations! You worked hard to save money into their 529 plan to pay for college. So now what do you do?

    First, if the scholarship doesn’t cover all the expenses, your 529 account is there to cover the difference. Tuition, room and board, mandatory fees, books, supplies, computers and related equipment and services are considered 529-qualified higher education expenses. As such, these withdrawals are not subject to federal or state income taxes.

    Second, if you are fortunate and the scholarship covers all the higher-education expenses, you can hold onto your 529 plan for your child’s continuing education such as graduate, law, or medical school.

    Third, you can transfer the 529 plan funds to another beneficiary. The new recipient must be a family member to the original beneficiary — including siblings, stepsiblings, stepparents, cousins, grandparents, nieces and nephews — to avoid tax penalties. You could hold onto the account for your grandchildren’s future college costs since there are no time limits for using 529 plans. You can even roll over the account to yourself to fund your own continuing education!

    Fourth, you have the option of withdrawing up to the same dollar amount as the scholarship from the 529 plan. This will be considered a non-qualified withdrawal and only the earnings portion will be subject to taxation. As your account contributions are made from after-tax dollars, the contribution portion of the withdrawal will not be taxed. However, the earnings portion of the withdrawal will be subject to federal and state income taxes. Normally, there would be an additional 10% federal tax penalty on the earnings but there are three waivers for this penalty: if the student becomes disabled or dies; if the student attends a U.S. military academy; or if the student receives a scholarship. In this circumstance, since the withdrawal is for a beneficiary earning a scholarship, this federal tax penalty is not imposed.

    Fifth, you can withdraw all the funds from the 529 plan account. This will be considered a non-qualified withdrawal. Like a 401(k) or a traditional IRA retirement account, there is a penalty assessed if money drawn from the account is used for something other than its intended purpose. So, an additional 10% federal tax penalty will be imposed on the earnings portion of the withdrawal. You will also owe federal and state income taxes on the earnings. You can choose to withdraw the funds and designate someone else - like your recent college graduate - to be the recipient of this withdrawal.

    So yes, your 529 plan is still a vital component of your college-saving strategy even if your child does earn a scholarship. Very few scholarships cover 100% of the costs, so a 529 plan is perfect for filling any gaps. If you haven’t opened an account yet, visit here to learn more. To watch a video about this topic by industry expert, Joe Hurley, founder of savingforcollege.com, go here

  • Hey Reds Fans! It’s Time For Baseball And CollegeAdvantage

    by Amy Lyle | Apr 11, 2016

    The Cincinnati Reds and CollegeAdvantage are partnering for the third season in a row to promote college savings at the ball park. This season, there are two ways you can hit a home run with the Reds and Ohio’s 529 Plan.

    We’re sponsoring the Family Sunday during Super Hero Weekend. Every child, 14 and under, in attendance on Sunday, April 24, will receive a Fathead Super Hero Wall Decal, presented by CollegeAdvantage. We would like to spend the day with you, so we’re giving away four sets of four tickets to four lucky winners!

    To enter, all you have to do is visit us on Facebook and enter before 11:59 p.m. ET on Monday, April 11. You can enter once per day, per e-mail address. For more information and sweepstakes rules, click here.

    In addition, we’re proud to be a sponsor of the Reds Heads Kids Club! Open to children ages 3 to 12, the Reds Heads Kids Club provides an opportunity to connect with the team and make memories that last a lifetime. Kids Club members can enter to win a $529 college savings award. We’ll be giving away four of these awards between now and Oct. 31. See the Kids Club coupon booklet for more information.

    Play ball!

  • Don’t Procrastinate About Saving For College

    by User Not Found | Apr 07, 2016

    In April 2015, CollegeAdvantage celebrated its 25th anniversary. In honor of this milestone, many longtime account owners shared their Saving Stories and how using CollegeAdvantage helped them achieve their goals. We are fortunate to have these encouraging stories of how families prioritized their children’s higher education and are sharing them again. 


    We feel old in light of the 25th anniversary of CollegeAdvantage, but then we are grandparents now! Our family has doubled since we opened that first college savings account. Now we have our two grown daughters plus a son-in-law and a grandson!

    Although it might have been easier to procrastinate about saving for college when the girls were young, we were disciplined and agreed about education being a priority. Our advice to young parents:  pay yourself first by starting a college savings account for your children. They will be your best legacy!

    We both worked and contributed to our own college, but hoped to make it easier on the girls by having saved at least half of what they would need. In addition to what we saved for them, both of our daughters worked and contributed to their educational expenses as well.

    Our eldest, earned her undergraduate in Elementary Education from Wright State University and her Masters at the University of Dayton. She’s been teaching 2nd grade for 7 years!  Our youngest, went to Eastern Kentucky University and earned her BSN in Nursing. Now she’s not only working full-time as an oncology nurse at the University of Kentucky’s Children’s Hospital, but also completing her Nurse Practitioner graduate degree through Northern Kentucky University. She graduates this summer!

    Obviously, we’re very proud of both daughters!

    Our grandson just celebrated his 1st birthday. The Dr. Seuss party theme was fitting since his Daddy and Mommy started a CollegeAdvantage fund for him just weeks after he was born. So he’ll be . . .

    “. . . off to Great Places!
    Today is your day!
    Your mountain is waiting . . .” 
    ― Dr. Seuss, Oh, The Places You'll Go!

     

    Marcus and Lora Warwar

    Miamisburg, Ohio 

    This story was originally published on April 24, 2015.
  • Tax Time Reminders

    by Ben Gibbons | Apr 05, 2016

    529 ​Plans offer a variety of tax benefits to help and encourage the entire family to save for future college expenses. Below are a few things to consider as you either prepare your 2015 tax return or look ahead for tax advantages for 2016.

    Annual Tax Documents

    Account owners who made a withdrawal from your Direct Plan account(s) during calendar year 2015, will receive a federal form 1099-Q, either in the U.S. mail or electronically, depending on the preferences you set up in your account. This form will report the total distributions, earnings, and basis for tax reporting purposes. As always, please consult your tax advisor to discuss the treatment of your 529 account for your individual tax situation. Forms are available online now. If you’ve requested paper copies of your forms, they were mailed on January 22, 2016.If you also own accounts in the CollegeAdvantage Guaranteed 529 Plan and/or the BlackRock CollegeAdvantage Advisor 529 Plan, you will be mailed separate forms from those accounts if you made withdrawals.

    $2,000 is Not a Cap

    If you are an Ohio taxpayer, contributions to CollegeAdvantage may be deducted from your Ohio taxable 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. Non-account owners who are Ohio taxpayers who make gift contributions directly to a CollegeAdvantage account also qualify for this deduction.

    Contribution Records for Tax Purposes

    Your annual account contributions summary can be viewed online and is also provided on quarterly account statements. Please be aware, the annual contribution summary shown online and provided in the statement includes contributions you have received from other sources, such as gift contributions from grandparents, family, and friends. When adding up your eligible contributions to claim your Ohio tax deduction, be sure to exclude gift contributions from others and any college savings awards that you might have won. Also, when claiming the Ohio tax deduction, please be sure to refer to your bank records or cancelled checks in addition to your CollegeAdvantage statement(s) and online records.

    Ohio taxpayers who gave gift contributions are eligible for the Ohio tax deduction, too, even if they are not the account owner. They just have to keep their own records of gift contributions paid directly to a CollegeAdvantage account (do not pay to a child or parent, contribute directly to the account to receive the tax deduction and save your cancelled checks or other records).

    Tax Time is a Good Time to Plan

    Tax season is a good time to plan ahead for all of your financial goals for the rest of the year. Be sure to log in to your Direct Plan account today to confirm your account balance and 2015 contributions. While you’re doing that, you can also utilize some of our tools to help in setting or adjusting your college savings goals. Whether you’re curious about how much you’ll need to save or you want to double-check your risk tolerance, use our tools today to gain further insights for investing. (And, if you’ve made it this far and don’t have a CollegeAdvantage account, we’ve got a tool to help see how much it costs if you wait to start saving for college!)

    Now’s the time to set your college savings goals, assess your progress, and plan your savings strategy for 2016!

  • 529 Resolutions For 2016

    by Amy Lyle | Apr 05, 2016

    Exercise more. Lose weight. Eat healthy. Save more for college. That’s right, you can resolve to save more for college this year! It’s as easy as 1 - 2 - 3:

    1. Set up recurring contributions. Account owners tell us that the easiest way to save the most is to automatically contribute money before you have a chance to spend it on something else. With automatic investments, you can set up recurring contributions to be made directly from your bank account. Time your contributions to align with your regular paydays. Or, establish a monthly contribution schedule. Just log in to your account and select “Automatic Investments” from the Asset Management menu.
    2. Let others help you save. We hear from grandparents and other family members that they want to help you save for college, but they are waiting for you to invite them to do so. It’s easy with Ugift®. Log in to your account, click on Ugift. Get a unique Ugift code for each of your beneficiaries. Share the Ugift code for each child with family and friends. There is no need to share your account number or the child’s Social Security number. Then, just instruct potential gift givers to visit www.Ugift529.com to make a secure online contribution using the unique Ugift code for the child. You can also invite them to participate via Facebook and Twitter. If they are Ohio taxpayers, they can deduct their own contributions from their Ohio taxable income even though they aren’t the account owner. Their gift contribution just needs to be made payable directly to the account instead of to the child. See the Plan Offering Statement for more details about contributions from non-account owners.
    3. Boost your savings with your tax refund. At tax time, a federal or state tax refund can put some “extra” cash in the family budget. Last year, the average federal tax refund was $2,785.* Resolve to get even closer to your college savings goal by contributing some, perhaps all, of your refund. Remember, the $2,000 Ohio income tax deduction isn’t a cap on annual contributions. Deductions for contributions over $2,000 can be carried forward to future tax years until fully deducted.

    *Source: IRS 2015 Filing Season Statistics

  • Aim To Double Your College Savings: Use The Rule Of 70 As Your Guide

    by Amy Lyle | Mar 31, 2016

    CollegeAdvantage welcomes the following guest blog from John Hupalo, Founder and CEO of Invite Education, a company dedicated to providing the information, tools and services families need to effectively plan and pay for college.

    It’s time to turn up your college savings strategy using a classic financial literacy concept: The Rule of 70. By taking a look at big picture goals, this rule of thumb can help you keep your eyes on the long​-term prize — achieving your family’s college dreams.

    Here’s how college savings can grow: Without a calculator, you can easily estimate the number of years it will take for money to double based on the rate of return.

    Take the number 70 and divide it by a growth rate. Let’s use 7% as an example.

    70 divided by 7 equals 10. This means that at a 7% growth rate, it would take 10 years for the investment to double. Using the same calculation and a 4% growth rate, an investment would double in 17.5 years.

    The power of compounding interest works for you:  The Rule of 70 is a powerful tool to help you understand the importance of starting a college savings plan as soon as possible. The early years of your child’s life actually represent the greatest opportunity to begin saving so that compound interest will work in your favor. But with so much happening in life, along with other expenses, savings can fall to the wayside.  Don’t let this opportunity pass by in those early years. You’ll thank yourself later.

    Some practical examples: Ultimately, you want to give enough time for investments to compound and hopefully double leading up to the first day of college. The Rule of 70 obviously cannot predict the future performance of investments, but rather it’s a rule of thumb to help guide your savings horizon.

    Let’s say at your child’s first birthday, you invested $1,000 that turns out to earn 5 percent annually. That amount would be worth around $2,336 on the child’s eighteenth birthday. If you were able to also contribute $100 per month, the amount available for college would be around $34,000.

    But, if you waited until that child’s tenth birthday to start saving, your initial $1,000 investment will only grow to about $1,491, in this example. If you contribute an additional $100 per month, the total saved will be about $13,000. That decade of delay ended up losing around $21,000! Lesson learned: start early to make compound interest work overtime!

    It’s never too late to save. Start today: You can see from these examples that you still have time to make a big impact on college savings. Even if you put away $25 a week, your money could grow considerably if you average 7% growth; it would be over $10,000 in seven years. While the key is to start sooner rather than later, the best option is to just begin now wherever you are in life.

    The Rule of 70 Chart

    Growth Rate/Year

    Years to Double

    1.0%

    70

    1.5%

    46⅔

    2.0%

    35

    2.5%

    28

    3.0%

    23⅓

    3.5%

    20

    4.0%

    17½

    4.5%

    15½

    5.0%

    14

    5.5%

    12¾

    6.0%

    11⅔

    6.5%

    10¾

    7.0%

    10

     

    This is an example of the prime range for education savings: growth rates that are generally achievable using investments with risk profiles that are appropriate for college savings in time frames that generally permit an opportunity for a Rule of 70 double.

    A word about growth rates:  Your return on investment — its growth rate — is another important concept. Generally, the greater the risk, the greater the potential return. The question is how to achieve a growth rate that can keep pace with college inflation without taking on too much risk. This is an in-depth topic for another day. Generally, college investments are more aggressive (meaning, potentially having more stocks than bonds in the portfolio) during the earliest years of college savings. As the student nears high school graduation, investments usually shift to a more conservative profile (high quality bonds and/or money markets) to preserve capital.  The last thing you want is to take losses just before the student is about to start college.

    It is important to understand the historical return information and risk measures associated with investment strategies. Historical returns cannot predict future performance, but they can offer some broad indications based on the asset classes associated with the portfolio, such as the differences between stocks and bonds, or domestic versus international opportunities.

    Action points for taking advantage of the Rule of 70:

    • Begin as early as possible to get the greatest benefit from the power of compounding. Remember the Rule of 70 is largely dependent on using time to your advantage.

    • Whenever your son or daughter receives cash on a birthday or holiday, place a chunk in the college savings account.

    • Establish a routine for saving. No matter what your current expenses are — and there will always be expenses — try to set up an automatic contribution each month or quarter. Even small amounts can add up to significant savings over time.

    It’s cheaper to save than it is to borrow: It should come as no surprise that compound interest can work against you when using student loans. Following a wise college savings strategy will reduce the need for student lending in the future, reducing unnecessary student loan debt. College costs will be paid for one way or another, so why not use the most affordable option?

    CollegeAdvantage - Ohio’s 529 Savings Program offers a variety of investment options that you and your family can take advantage of in order to maximize your savings and achieve your college goals. There are multiple opportunities based on your risk tolerance, investing preferences, and savings goals. All contributions that you make are tax-free and put you at an advantage for growing your savings. The choice is yours.  Consider the CollegeAdvantage Direct Plan or the BlackRock CollegeAdvantage Plan for your college savings goals.

    No matter what vehicle you use to save for college, start now and let the Rule of 70 help you achieve your family’s college dreams.

    John Hupalo is the Founder and CEO of Invite Education, a company dedicated to providing the information, tools and services families need to effectively plan and pay for college. Learn more about John on LinkedIn and Twitter. His upcoming book Plan and Finance Your Family’s College Dreams: A Parent’s Step-by-Step Guide from Pre-K to Senior Year will be published by Peterson’s in June 2016.

    Please Note:
    CollegeAdvantage is a 529 college savings plan offered and administered by the Ohio Tuition Trust Authority, an office within the Ohio Department of Higher Education. Before investing, please read the Offering Statement and all Supplements carefully and consider risks, fees, your investment objectives, and other relevant factors, before investing. If you are not a taxpayer in the State of Ohio, you should consider whether your home state offers any state tax or other benefits for investing in its 529 Plan.  Other than the Fifth Third Investment Options (Banking Options), money contributed to an Account is not a bank deposit and is not insured by the FDIC or guaranteed in any way. Except for contributions invested in Banking Options, participants assume all investment risk related to the CollegeAdvantage Direct Plan, including the potential loss of Principal. Contributions invested in Banking Options are an obligation of Fifth Third Bank and are insured by the FDIC, subject to certain limitations.

    The Ohio Tuition Trust Authority does not provide investment advice. The information contained herein is informational only and should not be relied upon exclusively to make your investment decisions.

  • 529 Plans And Financial Aid

    by Amy Lyle | Mar 28, 2016

    529 Plans can be used in combination with financial aid and scholarships, but it is important to understand how they work. 529 Plans are taken into consideration when determining financial-aid eligibility, but their impact on need-based financial aid is minimal.

    Financial aid can come from various sources. The two most common are need-based federal financial aid from the federal government and aid that may be offered by specific higher education institutions.

    First, let’s discuss need-based federal financial aid. It is important to be aware that federal financial aid is commonly offered in the form of a loan, meaning that the student will have to repay the financial aid in the future. Always be sure that you understand the type of aid being offered and whether or not you will have to repay it and the accumulated interest. In order to start the process of applying for federal financial aid, the student (and/or parent) will need to complete and submit the Free Application for Student Financial Aid (FASFA). The application and instructions are available at https://studentaid.ed.gov/sa.

    Application questions include the parents’ assets and income as well as the student’s assets and income. This information is added to a formula to determine 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 federal student aid based on need. Federal student aid is available in the form of Pell Grants (monies that do not need to be repaid), federally subsidized student loans (funds that must be repaid after college with interest), work-study programs, and loans parents can borrow from the federal government. While you may decide not to accept the offer of a student or parent loan, you should still complete the FASFA. In addition, even if you think that you won’t qualify for need-based aid, it is still recommended that you complete the FASFA because it is sometimes used by other entities when applying for scholarships and other forms of aid.

    The assets in a 529 Plan are a component in determining the EFC. 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 at just 5.64% of its value when determining the EFC. However, if the student is not a dependent and is the account owner, the 529 Plan account will typically be treated as the student’s asset and is generally factored into the EFC at the higher rate of up to 20%. 

    A side note: Custodial 529 accounts, funded from proceeds of an UTMA or UGMA account and Trust accounts, are treated as parental assets for the purpose of determining EFC. For additional information, please read page 7 of the CollegeAdvantage Direct Plan Offering Statement.

    Remember, a considerable benefit of a 529 Plan is that when a distribution is taken from a parent-owned account to cover a 529-qualified higher education expense of a dependent beneficiary, the amount of the distribution is not considered as income ​for the student and will not have to be included in next year’s FASFA. Therefore, a qualified distribution from a 529 account, in this situation, will not affect a student’s opportunity for financial aid.

    This could change with a grandparent-owned 529 Plan. As long as the funds remain in this type of account, it is not recorded on the FAFSA as part of the student’s income and it is not listed as a parental asset. However, once there is a withdrawal from this grandparent-owned account, the monies distributed will have to be listed as part of the student’s income on the FAFSA for the following year. And as part of a student’s income, the withdrawal will be assessed at 50% for the EFC. Therefore, it will have a negative effect on the student’s financial aid eligibility for the following school year. Federal financial aid calculations are complicated. You should consult a financial aid expert and your tax or financial advisor before setting up or requesting any withdrawal from a grandparent-owned account (or any account that is not owned by the dependent’s parent).

    A second financial aid option is available through higher education institutions. Most colleges and universities have their own financial assistance programs to offer students. Whether or not 529 Plans can be a factor in such monetary-assistance decisions is completely up to the specific school. Institutions vary in how they determine to distribute their financial assistance: Some schools follow the federal EFC formula; others use the CSS Profile (another formula developed by the College Board); and lastly, other schools have their own individual forms and calculations. For universities that use the federal EFC, 529 Plan accounts have already been incorporated in the formula.

    So yes, 529 Plans can have an impact on need-based financial-aid eligibility and amount; but it’s commonly only a minor effect. The advantages of tax-free growth and tax-free withdrawals can easily outweigh the total cost of repaying a loan plus interest. And these are only some of the benefits.

    If you would like to start planning ahead for financial aid, try the FAFSA4caster, a free financial aid calculator that gives you an early estimate of your eligibility for federal student aid.

    Please Note:

    CollegeAdvantage is a 529 college savings plan offered and administered by the Ohio Tuition Trust Authority, an office within the Ohio Department of Higher Education. Before investing, please read the Offering Statement and all Supplements carefully and consider risks, fees, your investment objectives, and other relevant factors, before investing. If you are not a taxpayer in the State of Ohio, you should consider whether your home state offers any state tax or other benefits for investing in its 529 Plan.  Other than the Fifth Third Investment Options (Banking Options), money contributed to an Account is not a bank deposit and is not insured by the FDIC or guaranteed in any way. Except for contributions invested in Banking Options, participants assume all investment risk related to the CollegeAdvantage Direct Plan, including the potential loss of Principal. Contributions invested in Banking Options are an obligation of Fifth Third Bank and are insured by the FDIC, subject to certain limitations.

     

    The Ohio Tuition Trust Authority does not provide investment advice. The information contained herein is informational only and should not be relied upon exclusively to make your investment decisions.

  • 5 Types Of Students Who Benefit From 529 Plans

    by User Not Found | Mar 15, 2016

    GUEST BLOG by Kathryn Flynn published with permission. Article ran Sept. 16, 2015, on SavingforCollege.com.

    According to T. Rowe Price's Family Financial Trade-offs study, 45 percent of families who are saving for college are doing so with a general savings account. In fact, only 31 percent of those surveyed are taking advantage of the benefits of 529 college savings plans.

    With events like 529 Day held in May and College Savings Month campaign in September, the college savings industry has been working hard to educate families on the tax advantages and other benefits these plans offer. Unlike traditional investment accounts, earnings in a 529 plan grow tax-free and are not taxed at withdrawal as long as the funds are used toward qualified educational expenses. Yet parents and grandparents are still hesitant because they just don’t believe 529 plans are right for their child.

    We couldn’t disagree more. No matter what “type” of student you’re saving for, a 529 plan is generally the best way to plan for college expenses.

    1. The Athlete

    • NCAA athletic scholarships are only awarded to about 2 percent of high school students and typical awards are under $11,000.
    • According to the College Board, the average one-year cost to attend a four-year public college is about $23,000 so most scholarships won’t even cover one half of the cost of one year.
    • Even if your child is a star athlete it might be a good idea to start saving with a 529 plan to cover the difference in what an athletic scholarship would pay versus the total tuition cost.
    • If you end up saving more than you need and have to make a nonqualified withdrawal, you can take the principal (the amount you contributed) without incurring taxes or penalties.
    • What’s more, there is an exception to the penalty tax rule in the case of scholarships – withdrawals made up to the amount of the tax-free scholarship will not be subject to the 10% penalty tax. The earnings portion, however, will still incur income tax similar to a traditional investment vehicle.

    RELATED: Scoring an athletic scholarship - What you need to know

    2. The Scholar

    • Similar to athletes, students who excel academically will likely earn some form of scholarship award.
    • The scholarship exception also applies for academic scholarships, so if you saved more than you needed in a 529 plan you can withdraw the contribution portion (up to the amount of the scholarship amount) without incurring a penalty tax.
    • If your child is in the running for an academic scholarship they likely have good chance of getting accepted into a prestigious school. However, the average annual total cost of attending one of Forbes’s 2015 top 50 colleges is almost $62,000 so supplemental 529 savings can definitely come in handy.
    • For a chance of getting any amount of academic scholarship your child will likely need to graduate in the top five to ten percent of their class, and that may not be for a full ride.
    • 529 funds can also sometimes be withdrawn tax-free if they are spent on room and board costs, books and supplies and equipment required for course enrollment.

    RELATED: 9 tips on getting into the Ivy League

    3. The Legacy

    • Grandparents who are looking to leave a meaningful legacy for their grandchildren should consider 529 plans as a way to pay for their grandchildren’s college education.
    • Contributions to 529 accounts are considered gifts for tax planning purposes, which means amounts up to $14,000 each year per individual will qualify for the annual gift tax exclusion.
    • What’s more, if you make a contribution between $14,000 and $70,000 for a beneficiary you can elect to treat the contribution as made over a five-year period for gift tax purposes.
    • This strategy is often suggested for those who are trying to reduce estate taxes because even though the account remains in your name, the assets will leave your estate.
    • Best of all, although the assets have left your estate you retain control and can take them back if needed. Keep in mind that if you do revoke the account its value will come back to your estate and be subject to taxes.

    RELATED: 8 reasons why grandparents love 529 plans

    4. Budget-Conscious

    • Students with limited funds to pay for college may be concerned with the effect 529 savings will have on their chances of getting financial aid.
    • Savings in a 529 plan will affect need-based financial aid eligibility, but they are treated as parental assets.
    • Parental assets are assessed at a maximum 5.64% rate in determining a family’s Expected Family Contribution (EFC), compared to a rate of 20% on non-529 assets owned by the student.
    • That means if you have $25,000 saved in a 529 account, the student’s eligibility for federal financial aid will decrease by $1,410. If the student saved the same amount in a regular savings or investment account, their financial aid eligibility would decrease by $5,000.
    • Some financial aid is also given in the form of loans that need to be repaid after graduation. In this case, it is more cost effective to save in advance with a 529 plan that will earn interest instead of borrowing and paying interest on a loan.

    RELATED: Yes, your 529 plan will affect financial aid 

    ​5. ​Non-traditional Students

    • Campus life at a four-year university isn’t for everyone, but most careers do require some sort of education or training.
    • 529 plan savings can be withdrawn tax-free to pay for expenses relating to a variety of post-secondary schools, including vocational and technical schools.
    • According to the College Savings Foundation’s sixth annual “How Youth Plan to Fund College” survey, 42 percent of students think of career schools the same way they think of traditional four-year colleges.
    • Many students are also choosing to attend a two-year community college and moving on to a larger school to obtain a bachelor's degree as part of a strategy to keep tuition costs down.
    • There is also an exception to the penalty tax rule regarding non-qualified 529 plan withdrawals if a student enrolls in a U.S. Military Academy, such as West Point. The amount contributed can be withdrawn tax free, and the earnings portion will avoid the 10% penalty and only be subject to income tax.

    RELATED: Who can open a 529 plan?

    Kathryn Flynn joined Savingforcollege.com in 2014 as a Financial Writer. She is a firm believer in the need for financial awareness and education. Her specialties include creating consumer friendly content related to college savings and personal finance for families. She has worked in the investment industry for over 10 years and brings a wealth of knowledge to our readers. Kathryn received her MBA from DePaul University in 2007 and currently resides in the suburbs of Chicago with her husband and three children. In her spare time, she enjoys running and spending time with her family.

  • Celebrating Judy Cunningham’s silver work anniversary

    by Amy Lyle | Mar 11, 2016

    Ohio Tuition Trust Authority (OTTA) recently celebrated its 25th anniversary and is delighted to welcome Judy Cunningham to this silver milestone, too!

    Tim Gorrell, executive director of OTTA, honored Judy’s exceptional accomplishment, stating, “For 25 years Ohio’s CollegeAdvantage 529 Savings Program has served over 750,000 beneficiaries. As a result, college or post-secondary training became doable for these recipients. With the help of CollegeAdvantage, careers were launched and lives were improved, immeasurably ensuring economic prosperity for thousands of families. A constant in this legacy is Judy Cunningham, who was a pioneer in the college savings initiatives and who has made an unquestionable difference passionately serving Ohioans and many beyond Ohio’s borders in achieving their college dreams.” 

    As one of the first employees at OTTA, Judy decided to join the new agency because she was attracted to OTTA’s mission of helping families prepare for their children’s higher education. She could envision the success achieved by families who attained their college savings goals for their children and its ripple effect through generations to come.

    Judy’s first role with the agency was as a production assistant, a position that blended public relations and outreach responsibilities. Additionally, she assisted in the customer service call center as needed. Judy was later promoted as the supervisor of the call center representatives/production assistants — employees who answered OTTA’s customer service phone lines during the day and then supported the speaking engagements and public events during the evenings and weekends. As OTTA evolved through the years, so did her roles. Now as the publication relations/community outreach manager, Judy has traveled the state encouraging parents to save for their children’s future college costs through CollegeAdvantage, OTTA’s 529 Savings Plan.

    In her career, Judy has heard many people share how OTTA has helped them to financially prepare for higher education expenses. But, her favorite saving story is her own. She and her husband, Bob, opened CollegeAdvantage 529 Plan accounts while their children were young and then saved regularly. All of the money that accrued in the accounts truly benefited their children when they started college. Judy shared that her daughter, while attending the University of Akron, would sigh in relief upon seeing students queued up at the financial aid office. She knew that because her mom and dad had been saving though the 529 program that she didn’t have to go join those lines. Their son attended Thomas Moore College in Kentucky with the help of their CollegeAdvantage savings. As Judy states, “My own personal experience is my best story.”

    Working at OTTA is wonderful, Judy says, for it’s “an agency that is very worthwhile and much needed for the families within the state of Ohio and throughout the country. It makes you feel good to know that you are helping and so, you enjoy the work.” Furthermore, Judy states, “I think that’s evident from how long everyone stays here. I might be the longest-serving, but there are a few others right on my heels. There are individuals coming behind me who have been here for nearly 20 years. So that’s indication that the work we do here has meaning and substance.”

    Judy has a particular passion for trying to help low-income families to aspire to and achieve the dream of higher education. There is one aspiration Judy hopes to see come to fruition some day: the creation of a 529 scholarship program for low-income families in Ohio.

    As for people who are considering a 529 plan, Judy has two recommendations. First, they should know that their 529 account can be used at colleges and universities across the country. Second, “Just get started!  You don’t have to be rich to participate in the program. What little bit you might have and you can afford to save will make a difference in the end.”

    Over the past 25 years, Judy and OTTA have watched generation after generation help their children achieve a college education with no to little debt through CollegeAdvantage. Judy’s dedication has never wavered. We at OTTA thank her for all her years of loyal service to these families and this agency! 

  • Guaranteed Plan Withdrawals And Tuition Payments

    by User Not Found | Mar 09, 2016

    Whether you’re paying tuition for the first time, or you have a little experience with the Guaranteed Plan already, we recommend that you plan ahead so that you know exactly how you will process your withdrawal request and pay your school’s tuition bill.

    Effective ​March 9, 201​6, the payout rates for the CollegeAdvantage Guaranteed 529 Savings Plan are:

    Tuition Unit: $101.​39

    Tuition Credit: $116.​60

    There are several ways to request a withdrawal and pay for second semester expenses.

    You can request a withdrawal online. There are two online methods for making a withdrawal for tuition and other qualifies expenses. Here are some helpful tips for each:

    1) Request a withdrawal be paid directly to your school.

    Using the online account management system, you can request that CollegeAdvantage pay your withdrawal directly to the school. When using this method, keep in mind that CollegeAdvantage pays schools by sending a paper check.

    To have your withdrawal check sent directly to the school to pay toward tuition, you must do the following:

    • Allow at least 10 business days following your withdrawal request for the check to arrive at the school.

    • Provide CollegeAdvantage with the student's name, student ID number and correct address of the school your beneficiary is attending.

    2) Request a withdrawal be paid directly to your bank account (account owner only).

    The fastest way to pay tuition is to make your online withdrawal payable directly to your bank account. Then, use the funds from your bank account to pay your school using the school’s preferred method. Here are some instructions you should know:

    Log in to your CollegeAdvantage Guaranteed Plan account and click on Withdraw Funds.

    • Withdrawals requested online before 4:00 p.m. ET on business days will be processed by CollegeAdvantage overnight. It may take additional time for your bank to show the withdrawn funds deposited to your account. Typically, this is between 3-5 business days from your request date.

    • Once you receive your electronic withdrawal deposited to your bank account, use your college’s tuition payment system to pay your tuition from your bank account. Most schools have their own electronic tuition payment process, as well as other forms of acceptable payment. Payment processing times will vary according to the school. Confirm details with your school’s bursar or financial office. (CollegeAdvantage is not responsible for any late fees charged by the school, so please plan ahead!)

    Request a withdrawal by mail:

    You can also complete your withdrawal, whether payable to you, the beneficiary or the school, via a
    Withdrawal Request Form. This form, as well as all other forms for the CollegeAdvantage Guaranteed 529 Savings Plan can be downloaded here.

    Please keep in mind that mail delivery will increase the processing times outlined above. CollegeAdvantage is not responsible for any late fees charged by the school, so please plan ahead.

    Please Note: Some Guaranteed Plan withdrawals cannot be processed online, and may require additional steps, listed on the
    Withdrawal Request Form.

  • New Guaranteed Plan WAT Rate Announced

    by Amy Lyle | Mar 09, 2016

    It was recently determined that a state university incorrectly implemented a fee increase this school year. (The school is in the process of reimbursing its affected students.)

    As this mandatory fee was originally included in the Weighted Average Tuition (WAT) calculations for the CollegeAdvantage Guaranteed 529 Savings Plan last August, the WAT must now be changed to reflect this fee correction.

    Therefore, effective March 9, 2016, the payout rates for the CollegeAdvantage Guaranteed 529 Savings Plan are:

    Tuition Unit: $101.39

    Tuition Credit: $116.60

    This change will have no impact on Guaranteed Plan withdrawals previously made during the 2015-2016 academic year. The new WAT rate will be the redemption rate in effect at the time of any withdrawal request made on or after March 9, 2016.

    As you continue to work toward your college savings goals, you should consider the age of your child, the number of years you have to save before college, your risk tolerance, investment goals, and tuition cost projections. Depending on your goals, you always have the option to rollover funds from your CollegeAdvantage Guaranteed Plan account to any 529 plan, including the CollegeAdvantage Direct or Advisor Plan at any time, without incurring tax consequences and a penalty. To do so, complete the Guaranteed Plan Withdrawal form.

    Withdrawal values are calculated according to Ohio Administrative Code and may change at any time and without notice.

    The Ohio Tuition Trust Authority does not provide investment advice. The information contained herein is informational only and should not be relied upon exclusively to make your investment decisions. Investment options should be selected based on your investment goals, risk tolerance, and savings time horizon.

    Please note: The earnings portion of non-qualified withdrawals may be subject to taxes and a possible 10% federal tax penalty. If you are considering taking a non-qualified withdrawal, please consult your professional tax advisor.

  • Fact: CollegeAdvantage Can Be Used At Any School Nationwide!

    by User Not Found | Mar 07, 2016

    “If I use CollegeAdvantage, does my child have to attend an Ohio college?”

    This is one of the most frequent questions we hear. Many people think that if they save with CollegeAdvantage that their child must attend an Ohio college or university in order to use the funds. That’s FALSE!

    Simply put: You can use your 529 account for expenses at nearly any public or private, two-year or four-year college nationwide! The institution must be a U.S. accredited college, university, graduate school, or technical school.  That is, the institution is eligible to participate in U.S. Department of Education student financial aid programs. A school is eligible if they have a Federal School Code, which can be searched at FAFSA.

    In spite of this fact, sometimes the myth remains. Here are some reasons why this misunderstanding may still exist:

    When the Ohio Tuition Trust Authority (OTTA) was established in 1989, it offered a prepaid tuition plan backed by the full faith and credit of the state of Ohio. The cost of the units available for purchase was based on the Weighted Average Tuition (WAT) of Ohio’s 13 public, four-year colleges and universities. CollegeAdvantage has always allowed families to use the value of their units at any accredited college in the nation. However, because the value of the units or credits at the time of withdrawal was based on the WAT of Ohio schools, the value withdrawn might not have covered as much at a non-Ohio school. The Guaranteed 529 Savings Plan closed in 2004 to new enrollments and contributions. However, families still withdraw their funds to pay their students’ expenses at colleges and universities across the country.

    In 2000, OTTA launched the CollegeAdvantage 529 Plan and began offering variable mutual fund investments for college savings accounts. This was the start of the CollegeAdvantage Direct 529 Savings Plan and the CollegeAdvantage Advisor 529 Savings Plan offered by BlackRock. These product offerings allow account owners to be selective about their investments and portfolios based on their personal risk tolerances, desired earnings potential, and savings goals. Yet, this major shift in the college savings product offerings still didn’t end the myth of Ohio-only schools.

    Although families from across the country choose CollegeAdvantage because of our investment options, performance, and low fees, 75% of all Direct Plan accounts, and 37% of all Advisor Plan accounts, are owned by Ohioans. The main reason for this is that only Ohio taxpayers are eligible to take advantage of the state of Ohio $2,000 income tax deduction for contributions to CollegeAdvantage accounts. Tax-free earnings and the state of Ohio tax deduction are great reasons for Ohioans to open a CollegeAdvantage account.

    The truth is that no matter where you live, when you save with CollegeAdvantage, your children can choose the school of their dreams. CollegeAdvantage can be used at any 529-eligible college or university in the nation!

  • Fact: Room And Board Is A Qualified Expense

    by User Not Found | Mar 03, 2016

    In case you didn’t know, paying for your child's housing expenses during their college enrollment is considered by Internal Revenue Code (IRC) 529 to be a "qualified higher education expense." Whether you're preparing to send your child to school soon or just need one more great reason to start saving, you should be aware that in addition to tuition and fees, room and board is a qualified expense. In order for you to use funds from your CollegeAdvantage account to pay for the housing expenses your child incurs during college, please note the following:

    • Your student must be enrolled at a qualified school at least half-time.
    • Room and board costs may not exceed the limits determined by the school for federal financial aid purposes. (Be sure to check every school year with the college for these dollar limits.)
    • On-campus housing and off-campus housing are included (within the limits).
    • Expenses of a special-needs student that are necessary in connection with his/her enrollment or attendance are considered qualified.

    Now let's talk about how to get room and board expenses paid.

    If the school lists your child's room and board on your tuition bill, when you make the withdrawal you have the option of requesting that we mail a check directly to the school. If your child's living expenses are separated from his/her tuition and fees expenses, then you will need to pay the property manager (or landlord, or fraternity/sorority, etc.) directly. For off campus housing withdraw the needed funds from your CollegeAdvantage account. We can deposit the money directly into your bank account, your student’s bank account, or mail a check directly to you or the beneficiary. For a refresher on withdrawing funds from your CollegeAdvantage account(s) and to see important timelines for withdrawals, review our guides for CollegeAdvantage Direct Plan or Guaranteed Plan accounts.

    As is the case with all college savings 529s, 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.

  • Give Me Five! Steps To Boost Your 529 Savings

    by Amy Lyle | Feb 25, 2016

    Everyone’s budget is tight. Setting aside money for a goal, even if it’s your child’s higher education, can be a challenge. In conjunction with America Saves Week, CollegeAdvantage highlights five simple ways to automate your savings to help achieve your financial objectives.

    1. Automate Contributions

    CollegeAdvantage 529 Plan account owners tell us the easiest way to save is to automatically contribute money before you have a chance to spend it elsewhere. Therefore, to grow your 529 Plan effortlessly, sign up for Automatic Investment Plan (AIP).

    With AIP, you can set up recurring contributions to be made directly from your bank account. You can align your automated 529 Plan deposits with your paydays or set a monthly contribution schedule. Many account owners use AIP to contribute regularly to their children’s CollegeAdvantage accounts, no matter the amount. Even if you’re putting away the $25 minimum per investment option, it can add up! You can also ask if your employer supports payroll deduction for CollegeAdvantage.

    2. Build Your Savings With Tax Refunds Or Disappearing Expenses

    A federal or state tax refund can be a budgetary windfall. The average refund from a 2014 federal tax return was $2,785. Consider how much closer your college savings goal would be if you contributed some or all of your refund to your child’s CollegeAdvantage 529 account. Remember, the $2,000 Ohio income tax deduction isn’t a cap on annual contributions. Deductions for contributions over $2,000 can be carried forward to future tax years until fully deducted.

    Another way to automate your savings is to add the money from disappearing expenses to your child’s 529 Plan. Disappearing expenses are those costs in your budget for a limited time span. For instance, daycare is a large disappearing expense for families. Once your child starts kindergarten, consider rolling over your former daycare costs into regular contributions to your CollegeAdvantage 529 account. You won’t miss it and you are continuing to support your child’s educational needs. Other disappearing expenses include paying off a car or your own student loans.

    Many account owners will also contribute a portion of an annual raise or bonus toward a CollegeAdvantage 529 Plan.

    3. Set Goals And Watch The Progress

    CollegeAdvantage offers many useful tools to help set your savings goal. Need help in determining how much to put aside each month? With our College Savings Planner, you can receive personalized saving information. After inputting your college funding goals and examining your total projected costs, you will receive an estimated monthly amount needed to meet your savings objective.

    Already putting money aside in an Ohio 529 Plan? You can track your investment performance, see if you need to change your saving strategy as your child grows, or perform regular maintenance on your 529 account.

    4. Let Others Help You Save Through Ugift

    Family and friends want to give meaningful gifts for the milestones in your child’s life. You can ask them to consider contributing to your child’s 529 Plan in lieu of gifts for baby showers, birthdays, holidays, graduations, and many other special occasions. Ugift® makes it simple for anyone to contribute to a CollegeAdvantage Direct Plan account; you just give your unique Ugift code to family and friends. The gift giver can make one-time or recurring electronic contributions at any time. If the gift giver is an Ohio taxpayer, they can deduct their own contributions from their Ohio taxable income. Their gift contribution needs to be made payable directly to the account, not to the child.

    5. Save While Shopping With Upromise

    With no cost to join, you can save even more money for college through Upromise. Connected with hundreds of America’s leading companies, your Upromise membership can earn you cash back as you shop online, dine out, fill your gas tank, buy groceries using eCoupons, book hotels, and more. By linking your Upromise account to your CollegeAdvantage Direct Plan, your earnings can be automatically transferred on a periodic basis, subject to a $25 minimum. Upromise is an optional service available to CollegeAdvantage Direct Plan account owners.

    These are five simple steps to help you reach your college savings goal. If you would like to read how others saved for their children’s college expenses, learn more at our blog. Ready to set up a highly rated Direct Plan account with CollegeAdvantage? Then go here.

  • 7 Ways to Automate Your Savings

    by Amy Lyle | Feb 19, 2016

    GUEST BLOG by ​Camilla Cheung, published with permission from Wise Bread.

    Sometimes, building a healthy cushion of savings can seem like a daunting task. We all know how easy it is to make a late credit card payment, or to end up spending all of your paycheck without remembering to save part of it. One easy way to get started on saving this America Saves Week is to automate your savings. Having technology work to save money for you takes much of the effort out of the equation, saves time, and makes it easier for you to achieve your goals.

    1. Automate Retirement Contributions

    If your employer matches retirement contributions to your 401K or retirement plan, be sure to take advantage of the free money! Sign up for retirement contributions to be automatically taken out of your paycheck. This saves you money in several ways. First, it contributes money before you even see your paycheck and get an opportunity to spend that money; and second, it saves you money on taxes as it is withdrawn from your pre-tax income.

    Even if you don’t have a retirement plan with your employer, you can still schedule your account to contribute automatically to your own retirement plan. Scheduling your contribution a day or two after you receive your paycheck ensures that saving for retirement is a priority.

    2. Transfer Money to Savings Accounts

    To prioritize savings, schedule an automatic transfer of a certain amount of your monthly income into a savings account. Your savings will benefit from being set aside from your regular spending, as well as benefitting from a higher dividend rate. Eventually, even just a small amount squirreled aside every month can translate into a healthy buffer of savings to hold you over on a rainy day.

    If you are self-employed or a freelancer and you have to pay quarterly or yearly taxes on your income, sending the estimated tax you owe to a separate account every month will help you to avoid an unpleasant surprise at tax time.

    3. Pay Bills Automatically

    Avoid late fees by paying your bills automatically. Some bills can be put on your credit card, whereas others can be set up to be paid directly from your bank account.

    It’s also a good idea to set up your credit card bill to be directly paid from your bank account. That way, you avoid late fees as well as costly interest on overdue amounts. Be sure, however, that you have enough money in your account to avoid overdrawing your account and incurring additional fees.

    4. Get Money Back With Credit Card Rewards

    There are many no-fee credit cards that offer cash back or rewards points. Use your card for all your regular purchases (and your monthly bills), and you’ll earn free rewards or cash back for your spending. If you plan to spend money on travel, rewards points that allow you to buy airplane tickets or hotel stays can also help save you money. Choosing the right credit card can also net you additional perks like car rental and travel insurance when you pay with your card.

    It’s important to use your credit card responsibly, so be sure you can pay your balance in full every month to avoid extra fees.

    5. Use Technology to Cut Energy Costs

    If you spend a lot on heating and cooling costs, investing in a smart thermostat can automatically save you energy and money, by reducing your energy usage during hours that you are away from home or at night. Many thermostats can also set different zones of your house to heat and cool differently depending on your needs, making your energy usage more efficient.

    When your appliances are in need of replacement, replace them with energy-efficient models that will automatically reduce your energy usage every time you use them.

    6. Simplify and Save While Shopping

    Many people can’t be bothered to cut out physical coupons and fiddle with all those little slips of paper at the store, but with smartphones, it’s much easier to automate the couponing process. Many grocery and big box stores have apps that allow you to choose the coupons you need from the app, and then apply them all by scanning your phone at checkout. Other apps aggregate coupons from many different retailers.

    For regular purchases of things like diapers, toilet paper, and other necessities, consider joining an online subscription service, which will deliver your purchases to your door regularly, as well as offer a discount in the process. That way, you won’t be stuck paying full price when you have to run out and buy these items at the last minute.

    7. Keep an Eye on Your Accounts

    Staying aware of the activities in your accounts helps you to track your spending, as well as detect any fraudulent activity. But it can be a bit of a pain to sign into each individual credit card and bank account separately. Instead, tie your accounts into an app (such as Mint.com) that allows you to see your transactions at a glance. This will help you to rein in your spending if needed, transfer money to savings or investment accounts, as well as save time keeping track of your accounts.

    By setting your finances to automatically save for you, you’ll quickly be on your way to saving both time and money.

    What will you do during America Saves Week to automate your savings?

    Wise Bread is an online personal finance and credit card education magazine. It has won best of the web awards from PC Magazine, Kiplinger, and About.com. 

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