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 Ohio's 529 Plan, CollegeAdvantage, 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 Ohio's 529 Plan, CollegeAdvantage. First, if the account owner lives in Ohio, they can qualify for up to a $​4,000 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 $​4,000 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 $15,000 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.

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

For more than 33 years, Ohio’s 529 Plan has been helping families across the nation save for their children’s higher education. Ohio’s 529 Plan covers qualified costs at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, or certificate programs, or continuing education classes nationwide that accepts federal financial aid. Learn, plan, and start for as little as $25 today at  CollegeAdvantage.  

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