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529 Tips

Give The Littlest Grads The Gift Of College

Pomp and Circumstance” swells as the sounds of rustling gowns and shuffling feet fill the air. The whole audience waits in eager anticipation with outstretched arms with cameras at the ready. Suddenly you see them, with tassels swaying on their paper plate “mortar boards,” crossing the stage to receive their mini diplomas. At the end of the ceremony, they are moving up to . . . kindergarten! Overwhelmed with pride, you think, “Wow, they are growing up so fast.” And then you realize, “Wow, they are growing up SO fast!”  

They really do grow up in the blink of an eye. By starting early, a college savings fund can grow with them. It’s easy, too, with Ohio’s 529 Plan, CollegeAdvantage.

What’s A 529 plan?

Established by the Internal Revenue Code 529 in 1996, 529 plans are the tax-advantaged way to save for college through tax- free earnings and tax-free withdrawals for 529 qualified higher education expenses. Additionally, Ohioans who save in Ohio’s 529 Plan, CollegeAdvantage, can deduct 529 contributions up to $4,000 from their Ohio taxable income per beneficiary, per year. But they are allowed to contribute even more! Contributions over $4,000 per beneficiary, per year, may be carried forward to deduct from future tax years until all of your contributions are fully deducted. By planning ahead for future college costs, a 529 account can grow through power of compound interest, regular contributions from not only the account owner but also family and friends, as well as all the tax benefits.

Ask Others For The Gift Of A College Education

You probably weren’t alone as you watched your preschooler graduate. Family and friends will want to give meaningful gifts for this and other important milestones in your child’s life. You can invite them to contribute to your child’s CollegeAdvantage account instead of giving traditional gifts for graduations, birthdays, holidays, achievements, and other special occasions. And it’s easy to arrange. You just need to log in to your CollegeAdvantage Direct Plan and click on Ugift to request a unique code, which will authorize gift givers to donate directly to a 529 plan online without needing the actual 529 account number. Once a gift giver has the code, they can continue to make one-time or recurring electronic gifts for college without fees. If the gift giver is an Ohio taxpayer, they too can deduct their own contributions from their Ohio taxable income. Their gift contribution just needs to be made payable directly to the account, not to the child.

Disappearing Expenses Can Become 529 Contributions

Also, with your child starting kindergarten this fall, you can add the money from disappearing preschool expenses to your child’s Ohio's 529 account. Disappearing expenses are those costs that are in your budget for a limited time span. And daycare/preschool is one of the largest disappearing expenses for families as their children grow. Once your child enters kindergarten, consider turning those dollars into regular contributions to your CollegeAdvantage 529 account. You won’t miss it and you will be continuing to support your child’s educational needs.

Age-Based 529 Investment Strategies

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 college savings. CollegeAdvantage also offers ready-made, age-based portfolios as well as ready-made, risk-based portfolios to tailor a 529 college savings plan to the individual needs of the beneficiary.

Boost The 529 Account With Upromise

Ohio’s 529 Savings Program has partnered with Upromise to help account save more for college. Upromise is a free loyalty program that offers its members cash back for their purchases from a wide variety of businesses, which include online retail stores and 10,000 restaurants where Upromise members can earn cash back. By connecting debit and/or credit card to an Upromise account, account owners can start earning rewards with everyday shopping. When the account owners link their Upromise account to their CollegeAdvantage Direct 529 Plan, they can roll these rebates straight to the account.

Curious how CollegeAdvantage Direct 529 Plan account owners used Upromise? Read this Saving Story from a family who used it to add to their 529 savings

Ohio’s 529 Plan Can Be Used Nationwide

Saving for college in Ohio’s 529 Plan does not mean that those funds can only be used in Ohio. 529 accounts can be used nationwide (and even overseas) at any accredited two-year, four-year, graduate or trade, or any other post-secondary schools that accepts federal financial aid. If the post-secondary school has a Federal School Code on the Free Application for Federal Student Aid (FAFSA), then the 529 plan can be used there to cover qualified higher education expenses. Basically, you can use the 529 account almost anywhere you’re comfortable sending both your student and your money. 

As you’ll soon experience, your children go from preschool to college really fast! Your college savings can grow with them by using Ohio’s 529 Plan. If you are ready to start saving with CollegeAdvantage, it’s easy to open an account online here. For a good overview on what is a 529 plan, visit SavingForCollege.com for a quick video. A 529 savings plan is an excellent alternative to student loan debt. CollegeAdvantage is your plan, your way.


Posted on May 7, 2018

Ohio Tuition Trust Authority

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