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Ohio’s 529 Plan has stayed at the top of 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
Nationwide, 49 states and the District of Columbia offer 529 plans. As of December 31, 2020, CollegeAdvantage Direct 529 Plan ranks first in the nation for the best investment performance in two different categories: five year and ten year. Ohio’s Direct Plan also ranks fourth in the nation in the three-year category.
For more than three years, Ohio's Direct 529 Plan has been ranked first in the nation for five-year investment performance. Additionally, Ohio's 529 Plan has been ranked first in the nation for 10-year investment performance for two years.
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.
Additionally, Savingforcollege.com has ranked Ohio’s Direct 529 Plan as the fourth best college savings plan for performance in the nation. This was determined by calculating a “performance score,” by analyzing the reported investment performance of a subset of portfolios from each state’s 529 savings plan programs. The plans are then ranked according to their score.
As well as with the investment performance rankings, Savingforcollege.com also uses a 5-Cap Ranking to designate the nation’s college savings programs for both residents and non-residents. 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 one of six 529 college savings plans nationwide to earn a 5-Cap rating for both residents and non-residents, as of September 30, 2020. Ohio’s Direct 529 Saving Plan has received this recognition multiple times for the plan’s attractiveness for Ohioans and across the nation.
Savingforcollege.com continually recognizes Ohio’s Direct 529 Plan as one of the best plans in the nation for both Ohio residents and non-Ohio residents.
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 now apprenticeships.
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 post-secondary school that accepts federal financial aid. If you want to confirm that the schools your child wants to attend — 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.
With the SECURE (Setting Every Community Up for Retirement Enhancement), two new qualified higher education expenses have been added to 529 college savings 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 repayments are 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. 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. 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 February 26, 2021