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Springtime! The weather improves, flowers start to bloom, and tax season is over! As the outside world warms up, your thoughts might turn to spring cleaning. As you start improvement projects around and outside your house, take the time to review your children’s 529 account as well. Ohio’s 529 Plan, CollegeAdvantage, can help.
It’s critical that you take steps to protect your information out on the Internet. Ohio’s 529 Plan has already implemented the cybersecurity measure of two-factor authentication to protect your valuable college savings account information from phishing attacks and identity theft. If it’s been a while since you’ve logged into your CollegeAdvantage Direct 529 Plan account, please make sure that your phone number is up-to-date. Your phone number is necessary to set up two-factor authentication, as you will receive either an automated outbound call or a SMS text to receive your PIN (Personal Identification Number). If your phone number is current, then you can just log into your account to initiate the two-factor authentication process. If not, please call the CollegeAdvantage toll-free number — 1-800-AFFORD-IT (1-800-233-6734) — before logging in. Our team members will be glad to help update your account profile once you complete a verification process.
To log into your account, create a strong and complex password that contains at least eight characters, including letters, capitalized letter, numbers, and special characters, like punctuation marks and symbols. Additionally, you should clear the cache and cookies on your computer, mobile, or handheld device regularly.
Rethink Your Refund
As mentioned earlier, tax season is over. If you’re receiving a tax refund, saving it in your Ohio 529 account could be your entire college savings plan.
Ohio’s 529 Plan has figured out how much in-state tuition you might cover by saving your tax refunds for 13 years. For instance, by saving $2,776 a year, you could pay for 75% of a two-year chemistry degree; by saving $588 you can cover 100% of a two-year medical assistant degree; or by savings $288, you can pay for 1000% of firefighter training. Watch this video to see the numbers! If you’d like to crunch the numbers yourself, use our College Savings Planner to see your tax refund can really grow your tax-free 529 plan.
More than one child?
If you opened a college savings plan when your first child was born but haven’t yet for your other bundles of joy, consider opening a 529 plan for each child. Individual 529 accounts can maximize the tax benefits of saving for college in a 529 plan. These advantages include tax-free contributions and earnings, which means all investment is growth is yours to use, and tax-free withdrawals when used to pay qualified higher education expenses.
Additionally, Ohio residents can deduct the Ohio’s 529 Plan contributions from their Ohio taxable income, up to $4,000 per year, per beneficiary, with unlimited carry forward. If you are an Ohioan with three Ohio 529 plans for your three children, you can maximize this tax benefit up to $12,000 per year. Because of the unlimited carry forward for the state income tax deduction, it means that $4,000 per year is not a contribution cap. If you have one 529 account and you’ve contributed $12,000, you will subtract $4,000 per year, per beneficiary, from your Ohio taxable income until all the 529 contributions have been deducted.
Age-based saving strategies
Has it been a while since you’ve opened your CollegeAdvantage account? It might be time to check out these age-based savings strategies, especially if you’re not in a ready-made age-based portfolio. With a ready-made age-based investment option, the equity in a portfolio will automatically decrease as your child grows older; this reduces risk in the portfolio the closer the time comes to use the account to cover higher education costs.
If you still have a baby or toddler, you’ve done a great job by already starting to save for their future higher education. When loved ones ask what gifts you’d like for your child, ask for the gift of a college education and share how they can add to your child’s account through Ugift. During kindergarten through elementary school, shift your disappearing expenses like diapers and day care costs to fund your child’s 529 plan. Those dollars you’ve prioritized for pre-K education can then support your child’s higher education. When your child enters middle school and high school, you may want increase your contributions to still maximize the power of compound interest to grow the account. Even if your child is about to start or has even started college, the benefits of tax-free earnings, tax-free withdrawals, and the state tax deduction for Ohioans can still build up the 529 account.
Tools and calculators
While you’re reviewing your Ohio 529, you can check to see if you’re on track with your college savings goals with our tools and calculators. With the college savings planner, you can receive an estimated monthly savings amount needed to reach your savings objectives. Change the planned contribution amount in this tool to see how setting aside a little more money can really add up. The cost of waiting tool can ascertain how much more you may need to save to reach your college savings goals if you don’t start soon. Lastly, your asset allocation strategy is one of the most important decisions you’ll make. If you aren’t sure what level of risk you’re willing to take in your investment strategy, the risk tolerance questionnaire can determine your comfort level.
As you’re enjoying the warmer weather, make sure to include your Ohio’s 529 Plan in your spring cleaning. Whether it’s performing account maintenance, starting automatic contributions to your 529 account, or updating account information, now’s great time to refocus on your college savings goals and your 529 account. For someday your child is going to college. Someday starts with Ohio’s 529 Plan.
Posted on April 19, 2019