Back To Blog

Two children creating holiday ornaments while mom watches

529 Tips

Give The Gift Of Higher Education With Ohio’s 529 Plan

As the end of 2021 approaches, are you looking to give a holiday gift with meaning and impact? Look no further than the gift of higher education!  A contribution to Ohio’s 529 Plan, CollegeAdvantage — whether adding to an existing account or opening a new 529 — is an investment in your children’s future. It will have a huge positive long-term impact by helping them with pay for future higher education costs.

And why choose a 529 plan to save for college? Let’s start with the tax advantages and follow up with all the many higher education institutions at which you can use the 529 funds.

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.

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.

Funds in Ohio’s 529 Plan can be used for all types of qualified higher education institutions, including a typical four-year college or university (public or private), two-year community college, technical or trade school, apprenticeship, or a certificate program. If the institution accepts federal financial aid, you can use the 529 plan there.

And saving in Ohio’s 529 Plan doesn’t mean the funds can only be used here in Ohio. Your college savings in Ohio’s 529 Plan can be used nationwide to any institution that accepts federal financial aid. You can check to see if a school does by visiting the Federal Student Aid website. For apprenticeships, the 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 registered, and therefore, eligible for a 529 withdrawal.

The use of the 529 funds are very flexible. They may be used to pay qualified higher education expenses  that are required to attend an institution. The costs include tuition, fees, room and board, books, computers, class supplies, certain apprenticeship costs and more. Families can even use up to $10,000 for student loan repayment for the beneficiary of the 529 account.

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 2021 total, they must be received in good order by CollegeAdvantage before 4 p.m. ET Thursday, Dec. 30.

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 re-contribution amount towards the $4,000 State of Ohio tax deduction.

Saving Made Easy With READYSAVE 529 app

For quick and simple to access your college savings account, we have has launched the READYSAVE 529 app. Our new savings app, developed in conjunction with our recordkeeping partner, Ascensus, makes it easy for you to access your account information, track account growth, and make both one-time and recurring contributions from the bank account on file from your cell phone! And with the READYSAVE529 app, you can send an invitation to your family and friends to contribute to your child’s higher education via Ugift — just in time for the holidays and end-of-year giving.

You can download the READYSAVE 529 app now from the Apple and Google Play app stores. The app requires iOS 14 or higher for Apple devices and Android 7.0 or later for Android devices. Once you install the app, select Ohio’s 529 Plan from the list and log in with the same username and password you use to access your account online.

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. 20, 2021, in order to be included in their 2021 State Of Ohio income tax deduction.

Ohio 529 Recognized Among The Nation’s Best

If you read 529 informational websites, you will discover how well regarded Ohio’s 529 Plan, CollegeAdvantage, is within the college savings industry. Financial industry organizations like Morningstar, Saving For College, CNBC, and Forbes have all rated Ohio’s 529 Plan as one of the best college savings programs in the nation. Here’s what they had to say.

Trusted financial industry investment research company Morningstar annually reviews the nation’s 529 college savings programs. Morningstar then ranks the 529 plans in a report released in October. 

Ohio’s 529 Plan is pleased to announce that the CollegeAdvantage Direct 529 Plan maintained its silver rating for the ninth year in a row. BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan retained its bronze ranking. This makes Ohio one of only two states that have both their Direct and Advisor 529 Plans ranked as medal-class college savings programs. The high ranking highlights the strength of and the industry’s regard for Ohio’s 529 Plan as one of the best in the nation.

According to Bobby Blue, a Morningstar analysist who reviewed Ohio’s Direct 529 Plan, “The Ohio CollegeAdvantage 529 Savings Plan benefits from a strong investment team, low fees, and a state partner willing to go to bat for participants. It retains its Morningstar Analyst Rating of Silver, making it an excellent choice for Buckeyes and out-of-staters alike.

Saving For College is a trusted and independent college-savings industry resource. In a recent analysis of 529 plan investment performances, Ohio’s 529 Plan is at or near the top for three out of four of the long-term performance charts.

Ohio's Direct 529 Plan is ranked first in the nation for the best investment performance in the three-year category. Ohio’s Direct 529 also ranks second in the country in 10-year category as well as fifth nationwide for five-year investment performance. 

Savingforcollege.com consistently recognizes Ohio’s Direct 529 Plan as one of the best plans in the nation for both Ohioans and non-Ohio residents.

Saving For College also uses a 5-Cap Ranking for the nation’s college savings programs. A 5-Cap designation is given to a 529 plan that “offers outstanding flexibility, attractive investments, and additional economic benefits (such as generous state tax incentives) that for some people, at least, will provide a substantial boost to their savings… .” 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.

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.

Forbes Advisor ranks Ohio 529 as one of the six best college savings programs in the nation, stating: “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.”

During the fall of 2021, CNBC selected Ohio 529 as one of the five best programs nationwide saying, “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.”

Visit Ohio’s 529 Plan online today 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 education comes after high school. Learn, plan and start with Ohio 529 Plan today at CollegeAdvantage.com.

This article was originally posted in December 2020 and has been updated to reflect new information for 2021.

 

Posted on December 02, 2021

Ohio Tuition Trust Authority

Back To Top