It’s graduation time! Are you searching for a perfect gift idea that will celebrate the graduate and support them on their higher education journey? A contribution to their account with Ohio’s 529 Plan, CollegeAdvantage, is the perfect gift for every grad, and for every grade.
A gift to their Ohio 529 account shows your belief in your favorite student and their abilities to fulfill their education dreams. For as little as $25, you can contribute to their 529 account or start one to help with their future college costs.
After all, 87% of parents would rather get money for their children’s college over any other gift.* And 90% of grandparents would give money towards college savings if the parents asked.**
Here’s some other 529 facts to show why it is great way to save for a higher education.
Ohio 529 tax benefits
There are many reasons to save for your child’s education after high school in Ohio’s 529 Plan. Let’s start with the tax benefits.
All earnings in a 529 plan are tax-free, so all investment growth is yours to use for higher education costs. Compound interest — the interest earned on contributions, earnings, and interest already accumulated in the 529 account — is included in the tax-free earnings. To see just how tax-free growth adds up with a 529 savings plan, use the Tax Benefit Calculator to see the difference between a 529 plan account and a taxable savings account.
In addition, 529 plan withdrawals for qualified higher education expenses are tax-free at accredited schools that accept federal financial aid. These costs include tuition; room and board (on and off campus) when the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student. Room and board costs can also include rent for off-campus residency —including apartment, homes, and Greek fraternities and sororities’ houses — and groceries (non-taxable items only), provided these costs are equal or less than the school’s room and board allowances.
529 plans can also be used to pay for certain apprenticeships costs — fees, textbooks, supplies, and equipment, including required trade tools. 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 Labor Department’s search tool to confirm that a program is eligible.
Additionally, 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.
There’s one last tax benefit for any Ohio resident who contributes to an Ohio 529 Plan account. Whether or not they are the 529 account owner, Ohio residents can deduct their contributions to Ohio’s 529 Plan from their taxable state income. The deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward, making Ohio one of only two programs nationally that offer this benefit. For Ohioans, this means that the $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions are deducted.
Use at many different kinds of schools
529 plans can be used for whatever school comes after high school – whether it’s a four-year university, a two-year community college, a vocational school, a certificate program, an apprenticeship, or graduate degree.
And you can use your Ohio 529 savings nationwide, not just in Ohio. As long as the higher education institute has a Federal School Code with the Federal Student Aid, an office of the U.S. Department of Education, then you can pay for qualified costs there with a tax-free 529 withdrawal.
Others can give to the Ohio 529 account
There are a few different ways loved ones can contribute to your Ohio 529 Plan.
The simplest is Ugift. As the 529 plan account owner, you can log in to your account and click on Ugift to receive a unique code for each of your beneficiaries. This code permits others to make online contributions to your CollegeAdvantage Direct 529 plan account without needing the actual account number or your child’s Social Security number. Once you share the code, friends and family can visit Ugift529.com to make their electronic contribution securely from their bank account. The code will last so loved ones can continue to contribute at any time they’d wish.
You can send an Ugift invitation to your family and friends to contribute to your child’s higher education from our READYSAVE 529 app. With the READYSAVE 529 app, you can quickly and easily access your college savings from your phone. Additionally, you can check your account information, track account growth, and make both one-time and recurring contributions from the bank account on file from your cell! 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.
If the gift giver would prefer to write a check, make sure it’s payable to Ohio Tuition Trust Authority and includes the 11-digit account number. You will then mail it in with this form. If your child receives monetary gifts as a graduation gift, you can also deposit that money into your 529 account by first depositing the money into a checking account then follow the above-mentioned steps.
It is just that simple for someone to give your child a gift of a higher education. It is just that simple for loved ones to support your dreams for your children.
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 school comes after high school. Learn, plan, and give a gift with as little as $25 with Ohio’s 529 Plan today at CollegeAdvantage.
This article was originally posted in May 2022 and has been updated to reflect new information for 2023.
*Source: Fidelity Investments “Gift-Giving Snapshot 2015.”
**Source: Fidelity Investments “Grandparents & College Savings Study, 2014.”
