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After submitting all the paperwork for your federal and state income taxes, take a moment to look back at the itemized deductions you were able to take. Was one for contributions made to a 529 plan? If so, then the tax season is a great time to check on your progress on reaching your college savings goals, determine if you need to adjust your 529 investment options, or increase yearly contributions to take full advantage of all the Ohio 529 tax benefits.
Make Any 529 Account Adjustments
CollegeAdvantage offers tools and calculators to help you build a 529 savings plan that best fits your family’s needs. You can set or rework your college savings goal, compare long-term tax benefits, or even see the cost of waiting to save. Additionally, you can use the tools to see what the estimated 529 account total could be if you deposited monthly automatic deposits, increased the dollar amount or the frequency of 529 plan contributions. You can time your college savings plan contributions to align with paydays or set up a monthly contribution schedule. Just log in to your Ohio 529 account and select “Automatic Investments” from the Asset Management menu to adjust the amount or frequency of your contributions. Every amount deposited into a 529 account, whether big or small, can help you reach your savings goal.
Also, take the opportunity to review your child’s time horizon to college and determine if some modifications need to be made to the 529 college savings plan. If your child just started kindergarten, you have more time to save even more as well as 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 already, you can still save and take advantage of tax-free earnings, tax-free withdrawals for qualified higher education expenses, and the state of Ohio income tax deduction for 529 plan contributions, which is available to residents of Ohio only.
If you’re getting an income tax refund, consider placing it into your CollegeAdvantage college savings plan. The average 2015 federal tax refund for Ohioans was $2,466. By adding $2,500 a year to a 529 plan, you could cover as much as 40% of college at an Ohio public university, based on 18 years at 6% growth. Do you want to check the math behind this number? Ohio 529 Savings Program offers a tool to calculate how much you can save by contributing your tax refund every year.
If you already have an account and would like to make some changes, log in to perform account maintenance, or increase automatic deposits.
If You Didn’t Take Any 529 Plan Deductions
If you weren’t able to take a state income tax deduction for 529 plan contributions because you haven’t opened an account, then don’t wait any longer! Take advantage of all the tax benefits in a 529 college savings plan and open an account today! 529 plans are a great alternative to student loan debt.
Saving for college is a forward-looking action plan. No matter the age of a child, it is never too early and it is never too late to start saving for them. CollegeAdvantage is your plan, your way.
Posted on April 17, 2017