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Ohio’s 529 Plan, CollegeAdvantage, recently updated our Advantage Age-Based Portfolios (AABP), a blend of active management and passive-index based portfolios, to adopt new funds based on the your child’s year of college enrollment.
This investment option allows your 529 dollars to stay in a single fund over the entire time horizon as your child matures. Within the portfolio, the asset allocation will rebalance quarterly. While your child is young, there are more stocks (equity) in the AABP’s asset allocation mix. Equities, which can offer greater returns, come with more risk due to market volatility. The equity allocation is highest while your child is young so if there is an economic downturn, there will be more time for your college savings plan to recover. As your child grows older, the mix adjusts with each new age band, reducing the amount of equity and increasing the amount of more conservative investments such as fixed-income and cash preservation options.
New college-enrollment-date fund
Every two years, Ohio’s 529 Plan will introduce a new fund to the AABP. On Aug. 1, 2018, CollegeAdvantage will add the 2038 year of college-enrollment-date fund as the age-based investment option for children born between Aug. 1, 2018 and July 31, 2020.
To review this new ready-made college-enrollment-date portfolio, go to the Investment Option Choices chart.
Save for college with a tax-advantaged 529 plan
Why save for your child’s future high education costs in a 529 plan? For the tax advantages! Ohio’s 529 Plan, CollegeAdvantage, offers benefits such as tax-free earnings and tax-free withdrawals for qualified higher education expenses. Additionally, Ohio residents are eligible to deduct up to $4,000 of their CollegeAdvantage contributions per beneficiary, per year, from their state taxable income. However, they can contribute even more! Contributions over $4,000 per beneficiary, per year, will be carried forward to future tax years until all contributions are fully deducted from resident’s state taxable income.
Why Save In Ohio’s 529 Plan?
Ohio’s 529 Plan, CollegeAdvantage, is well regarded within the college savings industry. In the most recent Savingforcollege.com quarterly analysis of 529 plan investment performances, Ohio’s 529 Plan is listed as first in the nation in five-year performance category. In the three-year performance category, Ohio’s Direct 529 Plan ranks at fifth in the nation. Additionally, Savingforcollege.com listed Ohio’s 529 Plan as one of its best-rated 529 college savings program across the U.S.
Morningstar gave CollegeAdvantage Direct 529 Plan a silver rating for the seventh consecutive year. Furthermore, Morningstar upgraded the CollegeAdvantage Advisor 529 Plan to a bronze ranking. This makes Ohio one of only eight states that have both their Direct and Advisor 529 Plans placed in best-in-class investment options by Morningstar. A recent Kiplinger report recognizes Ohio’s 529 Plan as having best age-based portfolio for conservative investors. Kiplinger drew special attention to two of Ohio’s 529 Plan individual investment options: Vanguard Wellington and Vanguard High-Yield Corporate. Additionally, Business Insider ranked CollegeAdvantage as the third best college savings plan in the nation. Bezinga, a financial insight website, has named Ohio’s 529 Plan, CollegeAdvantage, as best for performance of the nation’s college savings plans.
Ohio’s 529 Plan tools and calculators
If you haven’t started saving in 529 account, Ohio’s 529 Plan offers calculators and tools to build a 529 plan that best fits your family’s needs. The cost of waiting tool can determine how much more money you’ll need to save to reach your college savings goals if you aren’t able to maximize the power of compound interest by saving as early as possible. With the college savings planner, you can input your own figures to receive an estimated monthly savings amount needed to reach your savings goals. Use this tool to vary the amounts of monthly contributions to see how setting aside a little more money can really add up. The tax benefit tool can illustrate how the 529 plan tax benefits can build the account when compared to a taxable savings account. Your asset allocation strategy is one of the most important investment decisions to make. The risk tolerance questionnaire helps determine what level of risk you’re most comfortable with in your investment strategy.
An additional tool: If you aren’t sure that you want to save in a ready-made, age-based portfolio that automatically adjusts the asset allocation mix as your child grows older, CollegeAdvantage also provides 529 account strategies designated by life stages, to show what to consider as your child grows closer to needing the 529 funds for their higher education.
To learn more about all the investment options available with Ohio’s 529 Plan, please visit CollegeAdvantage.com. Visit us online to open a 529 plan and start saving for future higher education expenses. Even small amounts can add up to big amounts over time by saving regularly. Ohio's 529 Plan, CollegeAdvantage, is your plan, your way.
Posted on August 1, 2018