Why is it so hard to start the conversation about a college fund? Parents tell us they would love for the family to help. Grandparents say they’re waiting for their kids to ask. Extended family and friends have no idea what to do or how to do it. Somebody needs to take the reins here, and like most important things, it probably needs to be the family leader. You!
Loved ones want to present gifts with value. Let them know your children don’t need any more toys, but a contribution towards their education fund will have a lasting impact. Share that a college education or post-secondary vocational training can bring your children more opportunities in life.
First Step – Open An Ohio’s 529 Plan
Once you’ve opened a CollegeAdvantage 529 account, talk to your loved ones about your decision to save for your child’s college costs as means to fulfill your dreams for their future. Then ask if they would like to come along side you to support this dream. They don’t have to give big to add to Ohio’s 529 plan. Contributions start as low as $25 (a Fifth Third Certificate of Deposit requires a $500 minimum contribution) so they have flexibility in the amount they wish to contribute. If they so desire, they can also set up an automatic monthly amount to be transferred into the 529 account to provide ongoing support for your child’s college education plans.
Tax Benefits for Ohio Gift Givers To CollegeAdvantage
There are tax benefits for saving for college in CollegeAdvantage, Ohio’s 529 Plan such as tax-free earnings and tax-free withdrawals for qualified higher education expenses. Also, Ohio residents are eligible to deduct up to $4,000 of their 529 plan contributions per beneficiary, per year, from their state taxable income. However, they can contribute even more! Contributions over $4,000 per beneficiary, per year, can be carried forward to deduct from future tax years until all of their contributions are fully subtracted from their state taxable income. For contributions to be considered received for 2018, have them in good order with CollegeAdvantage before 4 p.m. ET on Monday, Dec. 31, 2018.
How Can They Make Their Contribution?
Gift givers have a variety of means to contribute to a 529 college savings plan. The simplest way is through Ugift As the CollegeAdvantage Direct 529 Plan account owner, you can log in to your account and click on Ugift to receive a unique code for each of your beneficiaries. This code permits others to make online contributions to your CollegeAdvantage Direct 529 plan account without needing the actual account number or your child’s Social Security number. Once you share the code, friends and family can visit Ugift529.com to make their electronic contribution securely from their bank account. The code will last so loved ones can continue to contribute to the same beneficiary at any time they’d wish.
If the gift giver prefers to write a check, make sure it’s payable to Ohio Tuition Trust Authority and includes the 11-digit account number. You will then mail it in with this form.
If you or another family member would like to make a substantial 529 plan contribution, you can invest up to $15,000 ($30,000 for married couples) per beneficiary without incurring any federal gift-tax consequences. You can even contribute up to $75,000 per beneficiary in a single year ($150,000 for married couples) and take advantage of five years’ worth of tax-free gifts at one time. For more information, please consult your tax adviser or estate-planning attorney.
Again, share with your loved ones that any Ohioan who donates directly to a CollegeAdvantage 529 account is eligible to deduct the contribution from their Ohio state taxable income. The deadline for having contributions received in good order by with CollegeAdvantage is before 4 p.m. ET on Monday, Dec. 31, 2018.
So take a deep breath and guide the gift conversation to your child’s CollegeAdvantage 529 college savings plan. Loved ones want to support your child now and in the future. Their gift contribution to a college savings account can do just that.
