You’ve seen the signs in your neighbor’s yard congratulating their family members. You’ve received the party invitations. It’s the special time of the school year – Graduation!
Are you searching for a perfect gift idea that will celebrate the graduate and support them on their higher education journey? A contribution to their account with Ohio’s 529 Plan, CollegeAdvantage, is the perfect gift for every grad, and the perfect gift for every grade.
A gift to their Ohio 529 account shows your faith in your favorite student and their dreams of education and career training after high school. For as little as $25, you can contribute to their 529 account or start one to help with their future higher education expenses.
Here are more 529 facts to show why it is great way to save for a higher education.
Ohio 529 tax benefits
There are many reasons to save for your child’s education and career training after high school in Ohio’s 529 Plan. Let’s start with the tax benefits.
All earnings in a 529 plan are tax-free, so all investment growth is yours to use for higher education costs. 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 Calculator to see the difference between a 529 plan account and a taxable savings account.
In addition, 529 plan withdrawals for qualified higher education expenses are tax-free at accredited schools that accept federal financial aid. These costs include tuition; room and board (on and off campus) when the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student. Room and board costs can also include rent for off-campus residency —including apartment, homes, and Greek fraternities and sororities’ houses — and groceries (non-taxable items only), provided these costs are equal or less than the school’s room and board allowances.
You can also use your 529 plan to pay for certain apprenticeships costs — fees, textbooks, supplies, and equipment, including required trade tools. The apprenticeship program must be registered with the Secretary of Labor’s National Apprenticeships Act to use a 529 plan withdrawal. Interested parties can check the Labor Department’s search tool to confirm that a program is eligible.
The third tax benefit is for any Ohio resident who contributes to an Ohio 529 Plan account. Whether or not they are the 529 account owner, Ohio residents can deduct their contributions to Ohio’s 529 Plan from their taxable state income. The deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward, making Ohio one of only two programs nationally that offer this benefit. For Ohioans, this 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 the 529 contributions are deducted.
Use at many different kinds of schools
529 plans can be used for whatever school comes after high school – whether it’s a four-year university, a two-year community college, a vocational school, a certificate program, an apprenticeship, or graduate degree.
And you can use your Ohio 529 account at more than 30,000 schools nationwide. As long as the higher education institute has a Federal School Code with the Federal Student Aid, an office of the U.S. Department of Education, then you can pay for qualified costs there with a tax-free 529 withdrawal.
How to give to the Ohio 529 account
There are a few different ways that loved ones can contribute to your Ohio 529 account.
The simplest is Ugift. As the 529 plan account owner, you can log in to your account and click on Ugift to receive a unique code for each of your beneficiaries. This code permits others to make online contributions to your CollegeAdvantage Direct 529 plan account without needing the actual account number or your child’s Social Security number. Once you share the code, friends and family can visit Ugift529.com to make their electronic contribution securely from their bank account. You can also send an Ugift invitation to your family and friends to contribute to your child’s higher education from our READYSAVE 529 app.
If the gift giver would prefer to write a check, make sure it’s payable to Ohio Tuition Trust Authority and includes the 11-digit account number. You will then mail it in with this form. If your child receives monetary gifts as a graduation gift, you can also deposit that money into your 529 account by first depositing the money into a checking account then follow the above-mentioned steps.
Since 1989, Ohio’s 529 Plan has been helping families across the nation save for their children’s higher education with many tax benefits. 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 CollegeAdvantage.
