Back To Blog
As the holidays approach, are you looking to give a gift with meaning and impact? Give the gift of higher education! A contribution to Ohio’s 529 Plan, CollegeAdvantage, whether to an existing account — or when you open an account — is an investment in your child’s future and has a huge positive long-term impact, helping them with future college costs.
What is a 529 plan?
529 plan is a college savings account that grows with many tax benefits, starting with tax-free earnings. This means all investment growth is yours to use to cover college costs. Withdrawals from a 529 plan that pay for qualified higher education expenses are also tax-free. The money in 529 plans can be used at any school that accepts federal financial aid – whether a two-year, four-year, or graduate schools as well as trade, vocational, federally approved apprenticeships, or certificate programs.
There is no fee to open an Ohio 529 Plan. Contributions start as low as $25 and can be increased to any amount, at any time. You can set up an automatic monthly contribution to be transferred into the 529 account to grow your loved one’s college savings.
State tax deduction for Ohioans giving to Ohio’s 529 Plan
If you, or any gift giver, are an Ohio resident, then you could both be eligible to deduct up to $4,000 of your Ohio’s 529 Plan contributions per beneficiary, per year, from your state taxable income. However, you can contribute even more! Contributions over $4,000 per beneficiary, per year, can be carried forward to future tax years until you’ve deducted all of your contributions are from your state taxable income. In order to have your contributions included in your 2020 total, they must be received in good order by CollegeAdvantage before 4 p.m. ET Thursday, Dec. 31.
If you received a higher education refund from your student’s room and board or other fees from earlier this year and you placed those funds back into your Ohio 529, you cannot include that recontribution amount towards the $4,000 State of Ohio tax deduction.
Others can give to Ohio’s 529 Plan
There are many ways to give the gift of a college education. You can open a 529 account for your child. If you already have a CollegeAdvantage Direct Plan account, you can provide other family members an Ugift code for your child’s account. This code permits others to make online gift contributions directly to your CollegeAdvantage Direct 529 Plan without your account number. Once you provide the Ugift code, friends and family can visit Ugift529.com to make their electronic contribution securely from their bank account. It’s that easy.
If a loved one who is an Ohio resident wants to give a gift of higher education to your Ohio 529 account through Ugift, their contribution must be received in good order before 4 p.m. ET Monday, Dec. 21, 2020, in order to be included in their 2020 State Of Ohio income tax deduction.
Why save in Ohio’s 529 Plan?
For more than 30 years, Ohio’s 529 Plan has provided families in and out of Ohio flexible options and educational resources to invest for education expenses after high school. Your college savings in Ohio’s 529 Plan can be used nationwide.
Ohio 529 Recognized Among The Nation’s Best
Ohio’s CollegeAdvantage Direct 529 Savings Plan is recognized nationally as one of the nation’s best 529 plans. The Ohio Direct 529 Plan is the only plan in the nation to receive both positive ratings from Morningstar in all four ranking pillars as well as the five-cap rating from SavingforCollege.com for residents and non-residents.
Morningstar, a trusted financial industry investment research and management company, reviews the nation’s 529 college savings programs. Once its analysis is complete, Morningstar ranks the college savings plans.
Based on this report, Ohio’s 529 Plan is pleased to announce that the CollegeAdvantage Direct 529 Plan maintained its silver rating. In addition, BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan retained its bronze ranking. This makes Ohio one of only four state programs that have both their Direct and Advisor 529 Plans ranked as medal-class college savings programs by Morningstar. The high ranking for both CollegeAdvantage 529 Plans highlights the strengths of these two college savings plans as well as the industry’s regard for Ohio’s 529 Plan as one of the best in the nation.
According to Bobby Blue, an analyst for Morningstar who reviewed Ohio’s Direct 529 Plan, “The Ohio CollegeAdvantage 529 Savings Plan is designed by a shrewd team and is attractively priced. The plan retains its Morningstar Analyst Rating of Silver, appealing to Buckeyes and out-of-staters alike.”
Morningstar determines the ranking of a 529 plan based on four pillars: Process, People, Parent, and Price. Ohio’s Direct 529 Plan is rated as positive in all four pillars, making it one of only eight plans nationwide to do so.
Other honors for Ohio’s 529 Plan
If you looked at other unbiased 529 plan informational websites, you have discovered how well regarded Ohio’s 529 Plan is within the college savings industry. Savingforcollege.com is a trusted and independent college-savings industry resource. Savingforcollege.com uses a 5-Cap Ranking for the nation’s college savings programs. A 5-Cap designation 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 one of only two 529 college savings plans nationwide to earn a 5-Cap rating for both residents and non-residents, as of August 2020. Ohio’s Direct 529 Saving Plan has received this recognition multiple times.
In most recent quarterly analysis of 529 plan investment performances from Savingforcollege.com, Ohio’s 529 Plan has topped two long-term performance charts - five year and ten year. As you are saving for your child’s higher education, you know the importance of long-term investment performance in order to grow your account.
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.
Visit Ohio’s 529 Plan online to start saving 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. A 529 account can be used for whatever comes after high school. If you’d like to do more research, explore Ohio’s 529 Plan —The Plan That Can — at CollegeAdvantage.com.
Posted on December 7, 2020