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As Career-Technical Education Month comes to a close, Ohio’s 529 Plan, CollegeAdvantage, wants to remind everyone once more that 529 plans cover qualified expenses at federally accredited schools. These include institutions for career training like trade, technical, and vocational schools, certificate programs, apprenticeships as well as four-year colleges and universities and two-year community colleges.

529 plans aren’t just for four-year programs

You can use your Ohio 529 account almost anywhere you are comfortable sending your child and your money. 529 plans can be used at any education institution that accepts federal financial aid. If you want to confirm that the schools your child is interested in attending — whether four-year, two-year, graduate, trade or vocational — 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 do, then you can use your 529 funds there.

If you child wants to start an apprenticeship, the program must be registered with the U.S. Secretary of Labor’s National Apprenticeships Act in order to use your 529 savings there.

Community colleges can be an excellent place to start education after high school. Usually lower in cost than a four-year program, your child can take required core classes that, in many cases, will transfer to other schools, or explore different courses while searching for their dream profession. Your student can work toward an associate degree or use the community college as a steppingstone to a traditional four-year degree. Either way, a 529 plan can cover qualified high education expenses.

If your child attends a federally accredited vocational or trade school after high school graduation, then these schools can provide a great education focused on specialized skills. Because of these schools’ close connections to professional trades, your child may graduate with a full-time, well-paying job already lined up. The schools’ areas of expertise can range from broadcasting, cosmetology, culinary arts, diagnostic imaging, graphic design, information technology, massage therapy, mortuary science, nursing, restaurant management, truck driving, to welding, for example. Your 529 plan can be used here, too.

In Ohio, there is a robust network of trade schools, under the Ohio Department of Higher Education (ODHE), known as Ohio Technical Centers (OTCs), which provide “post-secondary career and technical education (CTE) through 49 career centers across Ohio. These institutions offer programming in the skill trades (i.e., HVAC, phlebotomy, police training, EMT, etc.) that prepare learners for certificates, industry-recognized certifications, and state licensures. Many of the OTCs are positioned to respond quickly to the needs of business and industry by providing customize trainings and business consultation services to companies and organization to assist with meeting Ohio’s workforce goals.” 

Ohio 529 tax benefits

There are great tax benefits of saving for your child’s education after high school in a 529 plan. The first is that all earnings grow tax-free, meaning that all the investment growth is yours to use for your children’s future educational expenses. 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 tool to see the difference between a 529 plan account and a taxable savings account.

The second 529 tax benefit is that all withdrawals are tax free when used for qualified higher education expenses at these accredited programs. These costs include most of the major expenditures for attending an accredited institution like: tuition; room and board on- and off-campus residency and groceries (non-taxable items), provided these costs are equal or less than the same room and board allowances from the accredited education institution; 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; and qualified apprenticeships costs such as fees, textbooks, supplies, and equipment like required trade tools at for apprenticeships registered with the U.S. Labor Department.

The third tax benefit is that any Ohio resident — whether the account owner or a gift giver — who contributes to Ohio’s 529 Plan can deduct their contributions from their taxable state income. The deduction is $4,000 per year, per beneficiary, with unlimited carry forward, which 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 Ohio 529 Plan contributions have been deducted.

While there are many higher education paths forward for your kids, one thing is certain: Ohio's tax-free 529 Plan is the simple way to prepare. Your savings grow tax-free and stay tax-free when used for qualified higher education expenses. And Ohio's 529 Plan can be used at thousands of schools, nationwide.

For more than 34 years, Ohio’s 529 Plan, CollegeAdvantage, has been helping families across the nation save for their children’s higher education. Ohio’s 529 Plan covers qualified expenses 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 programs, or continuing education classes nationwide that accepts federal financial aid. Learn, plan, and start for as little as $25 today at  

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