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Ohio’s 529 Plan has topped two of the long-term performance rankings for Savingforcollege.com, a trusted college-savings industry resource. Savingforcollege.com provides unbiased research on 529 plans, financial aid, scholarships, and offers tools to help families estimate college expenses. Savingforcollege.com analyzes the performance of the nation’s 529 plans on a quarterly basis and ranks them. Ohio’s 529 Plan, CollegeAdvantage, has consistently received high marks for its long-term investment performance.
Ohio’s 529 Plan rankings
49 states and the District of Columbia offer 529 plans. As of December 31, 2019, CollegeAdvantage Direct 529 Plan ranks first in the nation for the best investment performance in two different categories: five year and ten year. Additionally, Ohio’s 529 Plan was ranked third in the nation in the one-year category and sixth nationwide for the best performance in the three-year category.
Savingforcollege.com determines a 529 plan’s performance score by comparing seven similar asset-allocation categories between all the nation’s 529 plans, the historical performance of each selected portfolio category, and then averaging the score of all the groupings.
Savingforcollege.com consistently recognizes Ohio’s Direct 529 Plan as one of the best plans in the nation for both Ohio residents and non-Ohio residents.
In addition to performance rankings, Savingforcollege.com uses a 5-Cap Ranking for the nation’s college savings programs. A 5-Cap designation is dependent on criteria that shows the college savings plan “offers outstanding flexibility, attractive investment, and additional economic benefits (such as generous state tax incentives) that for some people, at least, will provide a substantial boost to their savings. There are few, if any, weaknesses noted in the program.”
Ohio’s Direct 529 Plan is the only 529 college savings plans nationwide to earn a 5-Cap rating for both residents and non-residents, as of Dec. 17, 2019. Ohio’s Direct 529 Saving Plan has received this recognition multiple times for the plan’s attractiveness for Ohioans and across the nation.
Ohio’s 529 Plan tax advantages
Why save in Ohio’s 529 Plan? CollegeAdvantage helps families across the nation save money for their children’s future costs associated with college, vocational, trade, or technical school, as well as apprenticeships, while offering tax-advantaged benefits.
First, contributions and earnings grow tax free in a 529 plan, so all investment growth is yours to use to cover college costs. Second, a 529 withdrawal is tax free when used to pay qualified higher education expenses — those costs that are mandatory to attend the federally accredited school or program. Third, a CollegeAdvantage account owner who is an Ohio resident can deduct their 529 contributions from their Ohio taxable income. The deduction is now $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 per year is not a contribution cap. If an Ohio taxpayer contributes $12,000 in one tax year, they will continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions have been deducted.
Not Just For Four-Year Programs
529 plans can be used for whatever comes after high school, as higher education takes many forms. This list includes not just four-year universities and colleges, but also community colleges, trade and specialty schools, certificate programs, graduate school, law school, medical school and apprenticeships (see below).
Simply put, you can use the funds in your Ohio 529 Plan almost anywhere you are comfortable sending your child and your money. 529 plans can be used at any federally accredited educational institution, any post-secondary school that accepts federally financial aid. If you want to confirm that the schools your child is interested in attending — whether four-year, two-year, graduate, or vocational — accepts federal aid, then do a search to see if the institutions have a Federal School Code on the Free Application for Federal Student Aid (FAFSA). If the schools do, then you can use your 529 funds there.
Due to the passage of the SECURE (Setting Every Community Up for Retirement Enhancement) Act at the end of 2019, new provisions added two more qualified higher education expenses to 529 plans.
First, qualified costs for apprenticeships — such as fees, textbooks, supplies, and equipment like required trade tools — now can be paid with 529 distributions. The apprenticeship program must be registered with the Secretary of Labor’s National Apprenticeships Act in order to use a 529 plan withdrawal. Interested parties can check the U.S. Labor Department’s search tool to confirm that a program is eligible.
Second, student loan repayment is now a qualified cost for 529 plans. Any student loan that qualifies for the federal student loan income tax deduction can now be paid with a 529 distribution. There is a $10,000 lifetime limit per 529 beneficiary. However, an additional $10,000 can be used to repay qualified student loans for each of the beneficiary’s siblings.
Use Ohio’s 529 Plan Nationwide
While you may have saved in Ohio’s 529 Plan, you can use your funds at both Ohio schools and schools nationwide. 529 plans can be used across the United States at any accredited post-secondary school that accepts federal financial aid. If the institution accept this aid, it means it meet the eligibility requirements of U.S. Department of Education and you can use your 529 funds there. To confirm the school’s eligibility, a search to for a Federal School Code on FAFSA.
Tools and calculators
Ohio’s 529 Plan has calculators and tools to shape the 529 plan to best fit your family’s needs. Would you like to receive an estimate on your child’s projected college costs and what monthly 529 plan contribution can help you reach a saving goal? Then use the college savings planner. The cost of waiting tool can approximate how much more money will need to be saved if you get a late start on saving for higher education costs. The tax benefit tool shows the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account. Answer the risk tolerance questionnaire to determine an investment strategy best suited to your comfort level with risk.
Visit Ohio’s 529 Plan online to start saving today for your child’s future education. An investment in a 529 plan is an investment in your child where every dollar saved today is a dollar that doesn’t have to be borrowed later. Someday your child is going to college. Someday starts today at CollegeAdvantage.com.
Posted on March 4, 2020