Back To Blog

5_cap_Rating_Ohio_529_plan

529 Tips

Caps Off — Again — To Ohio’s 529 Plan

Savingforcollege.com, a trusted 529 industry informational website which provides analysis and reviews of the nations’ more than 100 college saving plans, recently released its 5-Cap ratings for the fourth quarter 2017.

Ohio’s 529 Plan, CollegeAdvantage, is only one of only five 529 college savings plan nationwide to earn a 5-Cap rating for both residents and non-residents. Ohio’s Direct 529 Saving Plan has received this recognition multiple times for the plan’s attractiveness for Ohioans as well as out-of-state residents.

5-Cap rating criteria

In order to receive a 5-Cap rating, Savingforcollege.com expects a program to “offer outstanding flexibility, attractive investment, and additional economic benefits (such as generous state tax incentives) that for some people, at least, will provide a substantial boost to their savings. There are few, if any, weaknesses noted in the program.”

Savingforcollege.com bases these ratings on five criteria:

  1. Performance, which is taken directly from Savingforcollege.com’s quarterly performance rankings;
  2. Costs of running a college-savings plan, which includes expense ratios, administrator and managerial fees;
  3. Features such as a spectrum of age-based and risk-based portfolios as well as FDIC-insured options, participation in programs like Upromise and Ugift, and contribution restrictions;
  4. Reliability signals such as plan disclosure statements, the ease of making account changes, and the quality and experience of outside program managers; and
  5. Added upgrades for residents of plan’s sponsoring state.

Ohio’s 529 Plan other rankings

As mentioned in the criteria, investment performance is a contributing factor in the 5-Cap ratings. For the first quarter of 2018, CollegeAdvantage Direct 529 Plan ranked first in the nation for best performance in the five-year category, and fifth nationwide in the three-year category. In the one-year performance category, Ohio’s Direct 529 Plan was ranked at sixteenth in the nation.

Additionally, Savingforcollege.com listed Ohio’s 529 Plan as one of its best-rated 529 college savings program across the states.

Other industry-trusted organizations has also highly regard Ohio’s 529 Plan. Kiplinger released its rankings for the best 529 college savings plans and the report recognizes Ohio’s 529 Plan as having best age-based portfolio for conservative investors. In addition, Kiplinger drew special attention to two of CollegeAdvantage’s individual investment options for conservative investors. Business Insider ranked CollegeAdvantage as the third best college savings plan in the nation. Morningstar, the leading provider of independent investment research, has named Ohio’s CollegeAdvantage Direct 529 Savings Plan one of the top 529 plans in the country by awarding a ‘silver’ rating for the seventh consecutive year. Bezinga, a website that offers financial insight, has named Ohio’s 529 Plan, CollegeAdvantage, as best for performance of the nation’s college savings plans.

Tax benefits of saving in Ohio’s 529 Plan

CollegeAdvantage helps families across the nation save money for their children’s future higher education costs with tax-advantaged benefits including tax-free earnings and tax-free withdrawals when requested to cover qualified higher education expenses. Additionally, if the CollegeAdvantage account owner is an Ohio resident, then they can deduct 529 contributions from their Ohio taxable income, up to $4,000 per year, per beneficiary, with unlimited carry forward. To be clear, $4,000 per year is not a contribution cap. The taxpayer can continue to subtract $4,000 per year, per beneficiary, from their Ohio taxable income until all the 529 contributions have been deducted.

Use at almost any school across the nation

Saving in Ohio’s 529 Plan does not mean that those college savings can only be used at an Ohio post-secondary school. Your CollegeAdvantage 529 plan can pay for qualified expenses at any federally accredited school nationwide, including two-year, four-year, graduate or technical schools.

Tools and calculators

Ohio 529 Plan has calculators and tools for you to shape the 529 plan to best fit your family’s needs.  Would you like to receive an estimate on your child’s projected college costs and what monthly 529 plan contribution can help you reach a saving goal. Then add the requested information to the college savings planner for an estimation. The cost of waiting tool can approximate how much more money you will need to be set aside if you postpone saving for higher education costs. The tax benefit tool illustrates the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account. If you aren’t sure how much risk-taking you are comfortable, answer the risk tolerance questionnaire to discover your tolerance for risk to determine an investment strategy best suited to you.

Saving strategies

You can review your savings strategy based on your child’s life stage with CollegeAdvantage. If your child started kindergarten, you have more time to 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, you can still take advantage of tax-free earnings (which helps you save even more) and you can maximize the Ohio tax deduction, too.

There’s a lot to celebrate when you save for your children’s future higher education expenses with Ohio’s 529 plan, CollegeAdvantage. It’s far cheaper to save for college now and earn interest in an 529 account than pay off students loans with accumulated interest later. With all benefits offered with a 529 plan, your green can grow to reach your college savings goal. Ready to start with CollegeAdvantage? It’s easy to open an account online. CollegeAdvantage is your plan, your way.

Posted on March 19, 2018

Ohio Tuition Trust Authority

Back To Top