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Your Ohio 529 Plan To-Do List For 2018

It’s the time of year when you’re not only tying bows on presents but also tying up your year-end to-do list. While working to whittle down the list before heading into the holidays, don’t forget to look at your Ohio 529 Plan, CollegeAdvantage.

Make sure you are maximizing all the 529 tax benefits to grow your account from tax-free earnings, tax-free withdrawals for qualified higher education expenses as well as state income tax deduction for matching contributions made to Ohio 529 Plan by residents of Ohio. As of Jan. 1, 2018, the State of Ohio income tax deduction has doubled to $4,000.

Your 529 contributions must be received in good order before 4 p.m. ET Monday, Dec. 31, 2018, to be included in this year’s total. Here’s some steps to get started.

Check your account balance and review your savings goals

Log in to your Direct Plan account to confirm your account balance and contributions to-date for 2018. Review the account balance and the list of contributions made throughout the year, subtracting all gift contributions and any college-savings award winnings that may have been added to your 529 plan. This final total should be the amount you alone have contributed to the account in 2018. While you’re collecting this information, you can also utilize our tools to set or adjust your college savings goals, see how much you’ll need to save or to double-check your risk tolerance. If you’ve made it this far and don’t have a CollegeAdvantage account we’ve got a tool to help see how much it costs to wait to start saving for your child’s higher education!

Make an end-of-year contribution to maximize Ohio tax deductions

After determining your current contribution total for 2018, you can make additional contributions toward your college savings goals and maximize your State of Ohio tax benefits for 2018. Again, contributions for 2018 are due in good order before 4 p.m. ET Monday, Dec. 31, 2018, to be included in the total for 2018.

For 2018, the new state of Ohio income tax deduction allows contributions up to $4,000 per beneficiary, per year, to be deducted from your taxable income as a resident of Ohio. Contributions over $4,000 can be carried forward to future tax years until fully deducted. Here are two examples of how the unlimited carry forward can be used. An Ohio taxpayer contributes $4,000 to two 529 accounts for each of her two children, for a total of $8,000. She could deduct a total of $8,000 from her Ohio taxable income for the year. Or, if an Ohio taxpayer contributed $8,000 to a CollegeAdvantage Direct Plan Account for one child in one year, he could deduct $4,000 from his Ohio taxable income during the current year, and also the next year. Don’t forget to keep copies of your bank statements and/or cashed checks as this is needed for your State of Ohio tax deduction.

Encourage others to give the gift of a higher education

It’s the holiday season and your loved ones want to give meaningful gifts. Talk to them about giving a gift of a higher education for your child by contributing to your 529 college savings plan. There are a variety of ways for others to make gift contributions to an existing account. And, gift givers who are Ohio taxpayers may deduct such gift contributions from their own taxable income.

Family and friends can even order greeting cards to share when they’ve made a gift for birthdays, graduations, or the holidays. Please allow 3-5 business days for shipping of greeting cards. If you need something sooner, gift announcements are available to download and include with any holiday or end-of-year contributions.

Review your investment options

The end of the year is also a good time to review the investment options you’ve selected for your child’s 529 account.

As you’re checking your college savings strategies, you may find that the investment options you selected for your child when they were a newborn might need to be adjusted now that they’re older. Ohio’s 529 Plan has guidance for many of your child’s life stages, from baby-toddler, kindergarten-elementary school, middle school, high school, college, and after college. If you would like to make some portfolio adjustments, you can make changes to your investment twice per calendar year. So you complete any investment changes before Dec. 31, you’ll still be able to make two additional changes in 2019, if needed.

Make that end-of-year withdrawal request or plan for a request in January

If there are qualified higher education expenses you would like to cover in 2018, please make your withdrawal when subsequent payment soon. Withdrawn funds should be used for qualified expenses incurred in the same year.  Here’s more information on how to prepare to make a withdrawal and college payments.

If you’re planning to make an end-of-year contribution to withdraw funds in early 2018, keep in mind that funds must be in the account for at least 7 business days prior to any distribution. 

Please remember that online and paper contributions must be received by Ohio’s 529 Plan, CollegeAdvantage, in good order before 4 p.m. ET Monday, Dec. 31, in order to be recorded as occurring in 2018.

So as you’re wrapping up the gifts and your 2018 to-do list, check that you’re receiving all the tax benefits with each gift of a higher education that you contribute to your Ohio 529 account.

Someday, your child is going off to college. Someday starts with Ohio’s 529 Plan, CollegeAdvantage.

Posted on December 26, 2018

Ohio Tuition Trust Authority

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