As 2023 winds down and the holidays approach, are you looking to give a gift with meaning and impact? Ohio’s 529 Plan can help with 529 Gift Central! A contribution to Ohio’s 529 Plan—whether by adding to an existing account or by 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 for education after high school. Withdrawals from a 529 plan that pay for qualified higher education expenses are also tax-free.
For 34 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 tax-free for all types of qualified higher education institutions nationwide, including a typical four-year college or university, community college, technical or trade school, certificate program, or apprenticeship. If the institution accepts federal financial aid, you can use the 529 plan there. For apprenticeships, the program must be registered with the Secretary of Labor’s National Apprenticeships Act. 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. You can also use your 529 plan to pay K-12 tuition up to $10,000 per student, per year, for enrollment at public, private, or religious elementary or secondary school. Starting January 2024, you can rollover remaining 529 funds to a Roth IRA, provided certain requirements are met.
There is no fee to open an Ohio 529 account. 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 deposited 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 have deducted all your contributions from your state taxable income. To have your contributions included for the 2023 State Of Ohio income tax deduction, contributions must be received in good order by CollegeAdvantage before 4 p.m. EST Friday, Dec. 29.
Saving Made Easy With READYSAVE 529 app
For quick and simple access to your college savings account, use 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
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 needing the 529 account number. 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. EST Tuesday, Dec. 20, to include in their 2023 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 Investopedia, Morningstar, 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.
Investopedia has picked Ohio’s 529 Plan as its best 529 plan for 2023 for our high performance ratings, age-based or customized portfolios, competitive fees, and FDIC-insured savings accounts and CDs. In their overview, Investopedia stated, “There are a lot of reasons to like Ohio’s CollegeAdvantage 529 plan—and a history of generating above-average returns is certainly one of them. According to performance reviews from Savingforcollege.com, the program is tops in the nation for 10-year returns. There’s no shortage of investment choices here, either. You can choose an age-based portfolio that becomes more conservative over time or a static risk-based portfolio that doesn't change its asset mix over time. You can also customize your basket of investments by choosing your own mix of stock and bond funds. The plans include funds from Vanguard and Dimensional Fund Advisors, as well as Federal Deposit Insurance Corporation (FDIC)–insured certificates of deposit (CDs) and bank accounts. From a fee standpoint, Ohio’s plan is one of the best around. Age-based options range between 0.15% and 0.31% annually, well below the national average. And risk-based and individual options are all 0.44% or less. No doubt that Ohioans have a strong incentive to sign up, with state tax breaks of up to $4,000 per beneficiary per year. However, with a stellar track record, numerous investment options, and low fees, people outside the Buckeye state will want to take notice as well.”
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 eleventh year in a row. In addition, BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan retained its bronze ranking. This makes Ohio one of only two state programs that have both 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 college savings plans as well as the industry’s regard for Ohio’s 529 Plan as one of the best in the nation.
Ohio’s 529 Plan was 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 continues to rank 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 continues to select Ohio’s 529 Plan as one of the ten best programs nationwide. As they wrote, “With the CollegeAdvantage (Ohio) 529 plan, anyone can sign up. There’s a good mix of investment options (including FDIC-insured accounts), low fees and plans from top companies like Vanguard, Dimensional Fund Advisors and Fifth Third Bank. There’s just a minimum contribution amount of $25 and Ohio residents can get a tax deduction.”
Money Inc. ranks Ohio’s 529 Plan, CollegeAdvantage, second in its list of the top ten 529 programs nationwide. They highlighted the “tax break for Ohio residents, a diverse selection of investment alternatives, and low fees.”
For more than 34 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 2023.
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