How is your 2024 going? If one of your New Year Resolutions is to start saving for your child’s education after high school, Ohio’s 529 Plan, CollegeAdvantage, makes it simple to do. And the newly added benefit of a 529-to-Roth Rollover, should address any concerns of what do with your 529 account if your loved one doesn’t choose to pursue any education after high school.
Why save in Ohio’s 529 Plan?
529 plans are specialized college savings accounts. 529 plans can be used at any federally accredited higher education institution — from two-year, four-year, graduate, trade or vocational schools, certificate programs, to an U.S. Labor Department registered apprenticeship. Another advantage is that 529 plans are accepted nationwide. If you save with Ohio’s 529 Plan, your child can use the Ohio 529 for any type of degree, at any accredited college, university, or other program in the country.
There are tax benefits for saving for college with Ohio’s 529 Plan, such as tax-free earnings and tax-free withdrawals for qualified higher education expenses. In addition, Ohio residents are eligible to deduct up to $4,000 of their 529 plan contributions per beneficiary, per year, from their state of Ohio taxable income. However, they can contribute even more! Contributions over $4,000 per beneficiary, per year, can be carried forward to deduct from future tax years, until all of their contributions are fully subtracted from their state taxable income.
Ohio’s CollegeAdvantage Direct 529 Savings Plan is nationally recognized as one of the nation’s best 529 plans.
Investopedia picked Ohio’s 529 Plan as its best 529 plan for our high performance ratings, age-based or customized portfolios, competitive fees, and FDIC-insured savings accounts and CDs. Investopedia said, “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 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.”
Ohio’s CollegeAdvantage Direct 529 Plan kept its silver rating for the eleventh year in a row. In addition, BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan, retained its bronze ranking for the fourth year. This makes Ohio one of only three 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 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.
Ohio’s 529 Plan was named one of Military Saves Savings Champions for our continued 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 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.”
How to open an Ohio 529 account
Opening an Ohio 529 account is simple and easy to do. Start by visiting CollegeAdvantage.com and click on the tab that says, “Learn,” to read how a 529 plan works and why it’s the best choice in which to place your higher education savings. Next is “Plan” tab, which takes you step by step on deciding how to set up your Ohio 529 account. The “Start” page will take you to the right spot to start your 529 education savings account. You can fill in all the information on your account applications in minutes with all the research you did before. You can save for your child’s future with as little as $25.
Already saving in Ohio 529?
Is your New Year’s Resolution to increase your savings in your 529 higher education saving fund? Here are some ideas to try.
- Review your 529 account. Are you putting enough funds aside to cover what you would like of your child’s college costs? If you want to check the numbers, use our College Savings Estimator to receive personalized saving information. You can vary your college savings goals to receive an estimated monthly amount needed to meet that savings goal. Please note that these examples are for illustrative purposes only.
- See if you need to adjust your savings strategy at each key stage. As your child reaches a new life stage, you may want to update your strategy to reach your college savings goals.
- Check your account balance and track the investment performances. If you would like to make a substitution to your 529 savings portfolio, you can make an exchange of an asset from one investment option to another investment option, twice in a calendar year for the same beneficiary.
- Simplify your savings by setting up automatic deposits into your Ohio 529 account. You can set up contributions to match your paycheck deposits or create your own monthly schedule. Some employers offer direct deposit, where a portion of your pay is directly deposited into your 529 account.
- Convert your disappearing expenses into regular 529 contributions. Disappearing expenses are those costs in your family’s budget for only a limited time span. For example, preschool is a large expense that disappears once a child starts kindergarten. Once your family no longer needs this service, deposit those savings into your 529 plan. You won’t miss the money while you continue to support your child’s educational needs.
- Invite other family members and friends to contribute to your child’s 529 plan with Ugift rather than giving toys or clothes. You can assure them that giving the gift of a higher education is much more meaningful and beneficial for your child’s long-term success.
- Shop with Upromise, a free loyalty program that offers its members cash back for their purchases from a wide variety of businesses. When you connect your debit and/or credit card to your Upromise account, you can start earning rewards with your everyday shopping. Then link your Upromise account to your CollegeAdvantage Direct 529 Plan account to roll over these rebates.
Simplify your savings with our app
For quick and simple to access your 529 college savings account, we offer the READYSAVE 529 app. Our new 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 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.
Newest 529 benefit
Starting Jan. 1, 2024, a new qualified expense was added to all 529 programs, the 529-to-Roth IRA rollover.
This new benefit addresses a concern of potential 529 savers of what to do with the 529 funds if their child decides not to pursue a higher education or receives scholarships that more than cover their college costs. With the new Roth IRA rollover, you can take those 529 education savings and give your children a jump start on their retirement savings. There are certain requirements the 529 account must meet to use this tax-free and penalty-free rollover.
If you have any other questions, please reach out to the Customer Service Representatives of Ohio’s 529 Plan, CollegeAdvantage, at 1-800-AFFORD-IT (233-6734) 8:30 a.m.-6 p.m. EST Monday-Friday.
This newest benefit further expands the flexibility of a 529 account. The 529-to-Roth IRA rollover joins the long list of other tax-free qualified higher education expenses such as tuition; room and board; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and class schedule; certain expenses for a special-needs student; qualified apprenticeships costs; payment of the principal and interest on qualified education loans for the 529 beneficiary or the beneficiary’s siblings. The loan repayment provision applies to repayments up to the lifetime amount of $10,000 per beneficiary; and payment of K-12 tuition up to $10,000 per student, per year, for enrollment at public, private, or religious elementary or secondary school.
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. Learn, plan, and start with as little as $25 at CollegeAdvantage.com.
*This article was originally posted in January 2021 and has been updated to reflect current information for 2024.
