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529 Tips

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

As 2022 winds down and the holidays approach, are you looking to give a gift with meaning and impact? Good news, Ohio’s 529 Plan is here to help with 529 Gift Central! 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 pay for their education after high school and avoid student loan debt.

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 higher education 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 33 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 have to be used here in Ohio. Your 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 and checking to see if the school has a Federal School Code. 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 uses for 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, mandatory fees, 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 for the 2022 State Of Ohio income tax deduction, contributions must be received in good order by CollegeAdvantage before 4 p.m. ET Friday, Dec. 30.

Saving Made Easy With READYSAVE 529 app

For quick and simple access your college savings account, we have has launched the READYSAVE 529 app. Our 529 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 for as little as $25 from the bank account on file from your cell phone.

You can download the READYSAVE 529 app now from the Apple and Google Play app stores. 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.

And with the READYSAVE 529 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.

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 Tuesday, Dec. 20, to include in their 2022 State Of Ohio income tax deduction.

To learn more about gifting options with Ohio’s 529 Plan and order holiday and special occasion greeting cards, visit 529 Gift Central.

Ohio 529 Recognized Among The Nation’s Best

If you read financial websites, you will discover the high regard for Ohio’s 529 Plan. 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 November. 

Ohio’s 529 Plan is pleased to announce that the CollegeAdvantage Direct 529 Plan maintained its silver rating for the tenth year in a row. In addition, BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan retained its bronze ranking. This makes Ohio one of only three 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 Karen Zaya, the Morningstar analyst who wrote reviews for both Ohio’s Direct and Advisor 529 Plans, “The Ohio Direct CollegeAdvantage 529 Savings Plan offers affordable options run by skilled investment managers and is overseen by a dedicated steward. It receives a renewed Morningstar Analyst Rating of Silver. The investment cohorts contributing to this plan are well-equipped and deeply experienced, underpinning an Above Average People rating. Vanguard’s Investment Strategy Group is responsible for the construction of the newly adopted progressive glide path, which is populated by a tidy lineup of Gold- and Silver-rated Vanguard index funds. Wilshire also manages a progressive option that includes exposure to active and passive funds, engaging its asset-allocation and manager selection teams to design the lineup.”

Zaya continues, “The Ohio Tuition Trust Authority (the state agency that administers Ohio’s Direct 529 program) has exerted a considerable influence on these direct-sold offerings. Continuity of leaders like tenured CIO Trisha Good (1996) and CEO Tim Gorrell (2015) and their commendable efforts to advocate for plan participants and gradually enhance this plan support an Above Average Parent rating. Ohio’s team works with consultant Wilshire to oversee this offering and has been historically effective in driving down fees, for example.

Saving For College is an independent college-savings industry resource. Saving For College consistently 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 Direct 529 Plan is one of three plans in the nation to receive positive ratings from Morningstar in all four ranking pillars as well as earn the five-cap rating from Saving For College for residents and non-residents.  Ohio’s Advisor BlackRock CollegeAdvantage 529 Plan is one of two plans to receive positive rankings in three Morningstar ranking pillars and earn five-cap rating from Saving For College for residents and four-and-a-half-star rating for 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 ten 529 college savings plans nationwide to earn a 5-Cap rating for both residents and non-residents, as of March 31, 2022. 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 was named in 2021 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’s 529 Plan as one of the six best college savings programs in the nation. 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.”

CNBC also 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.”

For more than 33 years, Ohio’s 529 Plan, CollegeAdvantage, has been helping families across the nation save for their children’s education after high school. Ohio’s 529 Plan covers qualified costs at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, or certificate program nationwide that accepts federal financial aid. Start, add, or give a gift with as little as $25 at CollegeAdvantage.com.

This article was originally posted in November 2020 and has been updated to reflect new information for 2022.

Posted on December 05, 2022

Ohio Tuition Trust Authority

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