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Ohio 529 Plan 1st In Nation In 2 Long-Term Performance Rankings

Ohio’s 529 Plan remains at the top of the long term performance ranking from Saving For College, a trusted college-savings industry resource which provides unbiased research on 529 plans, financial aid, scholarships, as well as offers tools to help families estimate higher education expenses.

Saving For College 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 June 30, 2021, CollegeAdvantage Direct 529 Plan ranks first in the nation for the best investment performance in the three-year and ten-year category. Ohio’s Direct Plan also ranks sixth in the nation in the five-year category.

Saving For College 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, Saving For College ranks Ohio’s Direct 529 Plan as the second 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.

5-Cap Rankings

Saving For College also uses a  5-Cap Ranking to designate the nation’s best 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 two 529 college savings plans nationwide to earn a 5-Cap rating for both residents and non-residents, as of June 30, 2021. For over five years, Saving For College has recognized Ohio’s Direct 529 Plan as one of the best plans in the nation for both Ohio residents and non-Ohio residents.

BlackRock CollegeAdvantage 529, Ohio’s 529 Advisor Plan, was also one of the top-rated advisor plan with a 4.5-Cap rating for in-state residents and 4.5-Cap rating for out-of-state residents.

Other Honors

Ohio’s 529 Plan has been named one of Military Saves’ Savings Champion for our continual support of this important program. Military Saves is part of the nonprofit Consumer Federation of America and is an initiative of America Saves. Military Saves works with government agencies, defense credit unions, military banks, and nonprofit organizations to promote savings and debt reduction.

Morningstar, a trusted financial industry investment research and management company, ranks the nation’s 529 college savings programs each year. Ohio’s Direct 529 Plan has earned Morningstar’s Silver ranking for many years. In addition,  BlackRock CollegeAdvantage 529 retains a bronze ranking. This makes Ohio one of only four state programs that have 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 strength 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.

Forbes Advisor ranks Ohio’s 529 Plan as one of the six best college savings programs in the nation for 2021. According to their explanation: “Ohio’s 529 Plan comes with features in line with the other plans on our list, including low fees, a range of investment options and a tax deduction for Ohio taxpayers. … The plan also comes with a minimum contribution, both to open the account and for each contribution thereafter. But it is small ($25) and likely manageable for many plan participants.”

Also in 2021,  CNBC selected Ohio’s 529 Plan as one of the five best programs nationwide. As they wrote, “There isn’t much not to like about the CollegeAdvantage 529 plan — there’s a good mix of investment options (including FDIC-insured accounts), low fees and plans from top companies like Dimensional Fund Advisors. In fact, overall management fees are some of the lowest we’ve seen. Combined with low expense ratios, this makes this plan one of our top picks.”

Ohio 529 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 nationwide.

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 additional qualified higher education expenses have been added to 529 college savings plans in recent years.

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.

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. Learn, plan and start an Ohio 529 Plan today at CollegeAdvantage.com.

Posted on September 14, 2021

Ohio Tuition Trust Authority

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