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12.28.2023

Ohio's 529 Plan Considered One Of The Best In The Nation

Ohio’s 529 Plan, CollegeAdvantage, is held in high regard across the country as one of the nation’s best higher education savings programs. If you are considering saving for your child’s education after high school, here is what the financial experts have to say about Ohio’s 529 Plan.

Morningstar

Trusted financial industry investment research and management company, Morningstar, reviews the nation’s 529 college savings programs and ranks the 529 plans in a report released every November.

Ohio’s CollegeAdvantage Direct 529 Plan maintained its silver rating for the twelfth year in a row. In addition, BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan, was upgraded to a silver ranking. This makes Ohio the only state program with both their Direct and Advisor 529 Plans ranked in a silver or higher college savings programs by Morningstar. The high ranking for both CollegeAdvantage 529 Plans highlights the strength of Ohio’s two college savings plans as well as the industry’s regard for Ohio’s 529 Plan as one of the best in the nation.

Additional honors for Ohio 529

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 consistently selects 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.”

Clark Howard has placed Ohio’s Direct 529 Plan on their dean’s list, which is determined by fees and expenses. Only 529 plans with annual fees less than 0.20% are placed on the dean’s list.

Tax advantages for saving with Ohio 529

Why save in Ohio’s 529 Plan? CollegeAdvantage helps families across the nation save money for their children’s future costs for their education after high school, while offering tax-advantaged benefits.

First, contributions and earnings grow tax free in a 529 plan, so all investment growth is yours to use to cover college costs. Second, a 529 withdrawal is tax free when used to pay qualified higher education expenses — those costs that are mandatory to attend the school or program. Third, an Ohio resident who contributes to a CollegeAdvantage 529 account – whether as the account owner or making a gift – can deduct their 529 contributions from their Ohio taxable income. The deduction is $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 per year is not a contribution cap. If an Ohio taxpayer contributes $12,000 in one tax year, they will continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the contributions have been deducted.

Not just for four-year programs

529 plans can be used for whatever comes after high school, as higher education takes many forms. This list includes not just four-year universities and colleges, but also community colleges, trade and specialty schools, certificate programs, graduate school, law school, medical school, and apprenticeships.

Simply put, you can use the funds in your Ohio 529 Plan almost anywhere you are comfortable sending your child and your money. 529 plans can be used at any post-secondary school that accepts federal financial aid. If you want to confirm that the schools your child wants to attend accepts federal aid, then do a search to see if the institutions have a Federal School Code on the Free Application for Federal Student Aid (FAFSA). If the schools have a code, then you can use your 529 funds there tax-free.

While you may have saved in Ohio’s 529 Plan, you can use your funds at both Ohio schools and schools nationwide. 529 plans can be used across the United States at over 30,000 post-secondary institutions.

Since 1989, Ohio’s 529 Plan has been helping families across the nation save for their children’s higher education. 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.