Ohio Direct 529 Plan winter withdrawl prep

Before you know it, the next payment for your child’s higher education will be here. So while doing this year’s holiday planning and shopping, take the time to prepare your CollegeAdvantage account in order to promptly pay the next round of your child’s expenses for 2022 and 2023. Here is some guidance to simplify the higher education savings withdrawal process for your CollegeAdvantage Direct 529 Plan.*

When will you pay the college costs?

First, decide when you will pay the upcoming college bills. If you plan on paying these qualified higher education expenses in 2022, then you need to make the withdrawal request in 2022. If you would rather wait and pay in 2023, then please make the withdrawal in 2023. In accordance with IRS guidelines, you should make a withdrawal from your Ohio Direct 529 plan the same calendar year that you will pay for the higher education costs.

Your Ohio 529 withdrawal must not exceed your child’s qualified higher education expenses. When it’s time to file your 2022 taxes, the burden of proof for tax purposes of the qualified expenses and withdrawals lies with you as the account owner. Retain all documentation and records of the 529-qualifed expenses and your corresponding withdrawals to pay them.

Two-factor authentication

Next, start the withdrawal process by confirming that two-factor authentication is set up on your CollegeAdvantage Direct 529 Plan. As the name implies, you’ll need to verify your identity twice.

First, log in as normal to your Ohio Direct 529 Plan account with your user name and password from a secure device. Second, select for a PIN (Personal Identification Number) to be sent to you by text, by phone, or by calling our Customer Service Department. Once you have the PIN, you will need to log in again within five minutes as the session is only valid for 10 minutes. If you miss that time period, you’ll need to request a new PIN. Once the PIN is entered, mark the device as trusted and the authentication process is complete. In order to keep the account secure, this process will repeat during the life of the account.

If you have more questions, visit the Two-Factor FAQ page or watch a video on the login page that describes the two-factor authentication process. As with any questions you may have, you can also call our Customer Service Department at 1-800-AFFORD-IT (1-800-233-6734), which is open from 8:30 a.m. – 6 p.m. ET Monday-Friday. Our office will be closed on Monday, Dec. 26, 2022, Monday, Jan. 2, 2023, and Monday, Jan. 16, 2023.

Update banking information

Next, verify that your home address and bank account information are correct on your account. If it’s not, update that information now. For security reasons, this information must be on file with Ohio’s 529 Plan for 15 calendar days before a withdrawal can be processed. To update your records online, select your beneficiary’s account. Then look on the left side of the screen, choose “View Profile and Document.” If you need to change your address, select “Profile” to edit your address. If you need to change bank accounts, select “Bank Information” to make the updates.

How to make an online withdrawal

After updating all your information, you will be ready to make a 529 withdrawal once you receive those bills.

The fastest method to pay an accredited higher education institution is to make a withdrawal request online. Start the process by logging into your account. Next, select the beneficiary’s account from which you’d like to make a withdrawal in order to pay for their qualified costs. Once you’ve picked the correct account, go to the left side of the screen and scroll down to the link, “Make a withdrawal.” After that, follow the prompts to make a withdrawal.

You will have three options on where to send the funds: to the school, to you or your bank account, or to your beneficiary or the beneficiary’s bank account. Withdrawals requested before 4 p.m. ET Monday-Friday will be processed in three to five business days. If you choose for the withdrawal to be deposited into a bank account, it will be sent electronically. You will need to allow some additional time for your banking institute to show that the funds have been deposited.

Once the 529 withdrawal is in your or your beneficiary’s bank account, use the school’s online portal to pay your child’s qualified higher education expenses. Make sure you enter the correct student ID number. Payment processing times will vary; check with the school bursar’s office to confirm the best time period to start the withdrawal process to ensure that the payment won’t be late.

If you’ve chosen for the withdrawal to go directly to the school, please be sure to provide Ohio’s 529 Plan with the correct student ID number for your child and the correct school address on the online withdrawal form. Ohio’s 529 Plan does not provide school addresses. The payment to cover your child’s higher education expenses will be mailed directly to the school. Depending on the United States Postal Service, as well as the school’s processing procedures, this can be a slower payment process. Again, ask the school bursar’s office how long this method would take and then make the withdrawal according to their provided timeline to avoid late penalties.

How to make a withdrawal with a paper form

You also have the option to mail in a Withdrawal Request Form, which will be the slowest withdrawal and payment method. In order to save time, fill in and then submit the form online. However, you can also print, fill out, and mail in the withdrawal request to the address found on the top of the first page of the form. To have the payment sent directly to the school, review the “Paper Check Delivery to the School” information to fill in section 3C of the form. A check for the withdrawn funds will be mailed directly to the school. 

You can also select to have the withdrawal mailed to your home or sent to your or your beneficiary’s bank account electronically. Once the funds are in a bank account, you can either mail a check to the school or use their online portal for payment of the education expenses. Again, this is will be slowest method of payment of the higher education expenses. If you choose to go this route, please start with the withdrawal process as early as possible to avoid any late penalties. You may want to verify with the school bursar’s office how long this process will take them to complete.

No matter which method you choose to make the withdrawal–whether online or by filling out paperwork–make sure to use the withdrawal funds to pay for the qualified higher education expenses in the same calendar as you made the withdrawal. As the account owner, you are responsible to maintain the records showing that the Direct 529 Plan withdrawals are used for qualified costs for the IRS.

End-of-year contributions

If you want to make additional deposits to your Ohio 529 Plan to pay these upcoming qualified expenses, these new contributions must be in your account at least seven business days before those funds can be distributed. This and other information is covered in the Withdrawals section on page 16 of the CollegeAdvantage Direct 529 Savings Plan Offering Statement and Participation Agreement.

If you are an Ohio resident, then you could 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, 2022.

Now, you can also make your contributions through the READYSAVE 529 app! You can download the READYSAVE529 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. With the app, you can contribute directly from your bank account to your Ohio 529 account.

You can also invite family and friends to give a gift to your account via Ugift. If loved ones, who are also Ohio residents, would like to add to your Ohio Direct 529 Plan, their contributions must be received in good order by CollegeAdvantage before 4 p.m. ET Tuesday, Dec. 20, 2022, in order to include their 529 contribution for their 2022 State of Ohio income tax deduction.

The most important step to take is to prepare now for upcoming 529 withdrawals. By taking action now, your 529 account will be set up to pay your child’s high education costs on time. If you have any further questions, our Customer Service Department is available to help from 8:30 a.m. – 6 p.m. ET Monday-Friday at 1-800-AFFORD-IT (1-800-233-6734).  Start, add, or give a gift with as little as $25 at CollegeAdvantage.com.

*Please note that this is the withdrawal process for CollegeAdvantage Direct 529 plan accounts only. The withdrawal process is different for the CollegeAdvantage Guaranteed 529 Plan. Please follow this guidance.

This article was originally posted in December 2019 and has been updated to reflect new information for 2022.

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