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Ohio’s 529 Plan, CollegeAdvantage, offers investment options for a variety of savers. For more conservative investors or for savers whose child will be going to college soon and wants to invest in a cash preservation option, Ohio’s 529 Plan partnered with trusted banking leader, Fifth Third Bank to offer 529 Certificate of Deposits (CDs). Fifth Third is a member of the Federal Deposit Insurance Corporation (FDIC).
Fifth Third Bank is encouraging people to save for their children’s future college costs by raising the rates for four of their 529 CD terms. These new rates will take effect on Thursday, Nov. 1, 2018.
The rate for the 3-5 Month 529 CD will rise from 1.00% Annual Percentage Yield (APY) to 2.00%. The interest rate for 6-11 Month 529 CD will increase from 2.00% APY to 2.25% APY. For the 12-23 Month 24-35 Month 529 CD, the rate will be raised from 2.00% APY to 2.50% APY. The APY for the 24-35 Month CD will increase from 2.50% to 2.75%. All other terms currently have an APY of 2.50%.
The minimum contribution to open a Fifth Third 529 CD, at any term, is $500. You cannot purchase a CD with payroll deduction or automatic recurring contributions.
Current CollegeAdvantage Direct 529 Plan account owners can purchase a CD online. Log in to your Direct Plan account and make a one-time electronic contribution of $500 or more from your bank account to buy a CD. After logging in, you can also go to “Change Your Investment Options” section to exchange a current investment with a $500 minimum to buy a CD. You can also download an Additional Contribution Form and mail it with a check to purchase a CD. When selecting to purchase a CD, choose what the term of maturity would best fit your family’s needs.
If you haven’t opened a CollegeAdvantage Direct 529 Plan, it’s simple to go online to open an account in minutes and purchase a Fifth Third 529 CD, following the steps above.
Two business days are required to complete the transaction to open a Fifth Third 529 CD. Accordingly, it will receive the APY in effect on the business day following the receipt of a contribution, which is received in good order before 4 p.m. on any given business day.
Once the CD reaches the end of its term, the balance will automatically transfer to a Fifth Third 529 Savings Account. At this point, you can make a withdrawal, or exchange the funds to another Fifth Third 529 CD or any other Ohio 529 Plan investment option. You can also opt to leave the money in the savings account to earn interest. If the 529 CD is liquidated prior to its date of maturity, penalties will be assessed.
Federal regulations for qualified 529 programs limit the number of times account owners can reallocate investment options for the same beneficiary. Currently, the limit is two exchanges of assets per calendar year, per beneficiary. Please refer to the CollegeAdvantage Direct Plan Offering Statement and Participation Agreement for additional details.
Both the Fifth Third 529 Savings Account and the Fifth Third 529 CDs are FDIC-insured investment options to certain limits.
Purchase a CD with these higher interest rates and start saving for your child’s future higher education expenses today! 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. Ohio’s 529 Plan, CollegeAdvantage, has tools to help you determine how much to save for future college costs as well as age-based savings strategies. Remember, it’s cheaper to save for college now, earn interest in a 529 account and use those savings to pay for college versus paying for student loans with accumulated interest later.
Posted on November 1, 2018