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Ohio’s 529 Plan First In Nation Again

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.

Posted on February 27, 2018

Ohio Tuition Trust Authority

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