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 2023 and 2024. 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 2023, make the withdrawal request in 2023. If you would rather pay in 2024, then please make the withdrawal in 2024. In accordance with IRS guidelines, you should make a withdrawal from your Ohio Direct 529 account the same calendar year that the higher education expense is incurred.
Your 529 withdrawal must not exceed your child’s qualified expenses. When it’s time to file your 2023 taxes, the burden of proof for tax purposes of the qualified expenses and withdrawals lies with you as the account owner. Therefore, retain all documentation and records of the 529-qualifed expenses and your corresponding Ohio Direct 529 withdrawals to pay them for your 2023 income taxes.
Two-factor authentication
Two-factor authentication must be set up to access your CollegeAdvantage Direct 529 Plan. As the name implies, you will need to verify your identity twice with this security protection.
First, log in as normal to your Ohio 529 Plan account with your username and password from a secure device. Your phone number must be current in your online account profile. The number is necessary to set up two-factor authentication, as you will receive either an automated outbound call or a SMS text to receive your PIN (Personal Identification Number). If your phone number is current, you will either be able to receive an SMS text or an automated outbound call.
If your phone number is not up to date, please call our Customer Service Department to set up a PIN. The team is available from 8:30 a.m. – 6 p.m. EST Monday-Friday at 1-800-AFFORD-IT (1-800-233-6734).
Once you have the PIN, you will need to log in again within five minutes; otherwise, you will need to request a new one. Once the PIN is entered, mark the device as trusted and the authentication process is complete.
If you have more questions, you can visit the Two-Factor FAQ page or watch a video on the login page that describes the two-factor authentication process. As with any account questions, our Customer Service Department is available to help from 8:30 a.m. – 6 p.m. EST Monday-Friday at 1-800-AFFORD-IT (1-800-233-6734). You can also email our Customer Service Department at customerservice@collegeadvantage.com. Our office will be closed on Monday, Dec. 25, 2023; Monday, Jan. 1, 2024; and Monday, Jan. 15, 2024.
Update banking information
Next, verify that your home address and bank account information are correct. 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 tax-free 529 withdrawal once you receive the bill for the qualified higher education expenses.
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 to make a withdrawal to pay for that child’s qualified costs. Once you have 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. Withdrawals requested before 4 p.m. EST Monday-Friday will be processed in three to five business days.
You will have three options on where to send the funds: to the school; to your bank account or sent to you; or to your beneficiary’s bank account or a check sent to the beneficiary.
If you choose for the withdrawal to be deposited into a bank account, it will be sent electronically. It will take time for your banking institute to show that the deposited funds. 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 to start the withdrawal process to ensure that the payment will not be late.
If you’ve chosen for the check to go directly to the school, please be sure to provide Ohio’s 529 Plan with the correct student ID number and the correct school address on the online withdrawal form. Ohio’s 529 Plan does not provide school addresses. The payment will be mailed directly to the school.
How to make a withdrawal with a paper form
You can mail in a Withdrawal Request Form to Ohio’s 529 Plan, which will be the slowest withdrawal and payment method. To save time, fill in and then submit the form online. Otherwise, you can 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 paying the college expenses. If you choose this route, please start 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 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 for maintaining the records showing that the Direct 529 Plan withdrawals are used for qualified costs for the IRS.
Contributing to your 529 to make a withdrawal
If you want to deposit additional funds to your Ohio’s 529 Plan to pay of these upcoming qualified expenses, these new contributions must be in your account at least seven business days before those funds can be distributed and the withdrawal processed. This and other information is covered in the Withdrawals section starting on page 8 of the CollegeAdvantage Direct 529 Savings Plan Offering Statement and Participation Agreement.
The most crucial step is to prepare now for upcoming 529 withdrawals. By acting now, your 529 account will be set up to pay your child’s college costs for the next semester. 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). Please remember that our office will be closed on Monday, Dec. 25, 2023; Monday, Jan. 1, 2024; and Monday, Jan. 15, 2024. Manage your Ohio 529 Plan account 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.
This article was originally posted in December 2022 and has been updated to reflect new information for 2023.
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