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Don’t forget fall back and reset your clocks this Sunday. You can use this extra hour to set aside some funds for your child’s higher education expenses.
Daylight Savings Time can be a reminder that time is ever drawing closer to for your child heading off to start their higher education. Before you fall back on old behaviors, let’s turn over a new leaf to make saving for college easier.
Get a head start on college savings in a 529 plan
If you haven’t started saving for your child’s higher education yet, this extra hour is the perfect time to set up an account with Ohio’s 529 Plan, CollegeAdvantage. With as little as $25, you can open an account in minutes online.
And why should you choose to save in Ohio’s 529 Plan? For the tax advantages! In a 529 account, investment earnings grow tax free, unlike other savings accounts, which can be taxed each year. Account withdrawals are also tax free, as long as they are used for 529-qualified higher education expenses, which include major costs like tuition, room and board, and computers to name a few. Effective Jan. 1, 2018, contributions to Ohio’s 529 Plan made by Ohio residents can be deducted up to $4,000 per beneficiary, per year, with unlimited carry forward, from their State Of Ohio taxable income. Even if college is only few years away, or even a few months away, the many tax advantages can still boost the value of your 529 college savings.
If you wondering what happens if you save in Ohio’s 529 Plan but your child decides to pursue their higher education out of state, there’s nothing to fear. Ohio’s 529 Plan is your “save here, go anywhere” college savings account. 529 plans can be used nationwide at any federally accredited educational institutions – whether for an associate, bachelor’s, graduate, professional, trade, technical, or vocational degree. You can use your account almost anywhere you’re comfortable sending both your student and your money. If the school has a Federal School Code on the Free Application for Federal Student Aid or FAFSA, then the withdrawals to cover qualified higher education expenses at that school will be tax-free.
Set up automatic contributions
One of the simplest ways to save is to set up automatic deposits to an Ohio 529 college savings account and then forget about it. Many our account owners say it’s easiest to have contributions automatically transferred from their checking or savings bank accounts to the 529 account before the funds are unintentionally spent on other expenses. Electronically transferred 529 contributions can be scheduled to match your paycheck deposits or to another monthly contribution schedule. Some employers also offer payroll deduction, where a portion of your paycheck is directly deposited into your CollegeAdvantage Direct 529 account. You can login to your 529 account and establish payroll deduction through direct deposit. You can also complete then mail in a payroll deduction form. Just so you know: A Fifth Third Certificate of Deposit (CD), which requires a $500 minimum contribution to open, is not available for purchase through automatic recurring contributions or payroll deduction.
Tools and calculators to shape the 529 that’s right for your family
Ohio’s tax-free 529 Plan has tools and calculators to show how to make college doable. Start with the College Savings Planner to estimate the cost of your child’s higher education and then set your savings goals. The cost of waiting tool can approximate how much extra money may need to add to a 529 plan if your family is getting a late start on higher education savings. The tax benefit tool shows the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account. There’s even a tool to discover with what level of investment risk with which you’re comfortable. You can also see how the power of compound interest in Ohio’s 529 Plan can grow the college savings account.
Learn more with our college savings webinar
The path to a higher education starts with a strong financial plan. To help you and other families to build a college-savings strategy, Ohio’s 529 Plan is sponsoring a free webinar on “How to Save, Plan, and Pay for College” with Sallie Mae. This Nov. 28 webinar is designed to help high school seniors, their parents, school counselors, and financial advisors decide how to best to cover higher education expenses.
Set for 12 p.m. ET on Wednesday, Nov. 28, the webinar will also include a demonstration of how to use the Sallie Mae College Planning Calculator to figure out college costs, build a plan to reach a specific savings goal, or figure out how to pay for college with 529 plans, savings, scholarships, grants, and loans. To register, please go to https://salliemaebank.webex.com/salliemaebank/onstage/g.php?MTID=e2485e846d8773acd40a047fa70df3675. If you get an error message when clicking on the link, please copy and paste this URL into a new browser. The dial-in number is 1-877-860-2120 and the conference ID is 7278305.
Someday, your child will be going to college so start saving with Ohio’s tax-free 529 plan. If you’re ready to start saving for your child’s future higher education expenses, it’s simple to go online to open an account in minutes. A 529 account can be used for whatever comes after high school — whether vocational or trade programs, community or traditional four-year college or university programs. lf you already have a 529 plan, then it might be time to review these life-stage account strategies or perform account maintenance.
Posted on October 31, 2018