March Madness is upon us. Just like the teams battling it out on the hardwood, there’s lessons to be learned from this year’s college basketball championship tournaments that you can apply to your 529 savings for your children’s college or career training. Ohio 529 CollegeAdvantage has a starting five of ideas which you can put into practice with your 529 account.
Practice, practice, practice. Repeat.
How did these teams get so good on the court? They practiced. Then they practiced some more. And after that? They continued to practice. These teams put their training on repeat so they could build their skills and teamwork.
Automatic contributions are like putting your Ohio 529 contributions on repeat and is also the easiest and best way to build your college savings. With automatic contributions, you can pay yourself and then your child’s future higher education first, rather than remembering to set aside some dollars to contribute near the end of the pay cycle. Most account owners say it’s easier to set up automatic contributions and then forget it. You can set these automated deposits from your banking accounts to mirror your paydays or arrange a monthly contribution schedule. Also, your employer may offer a direct payroll deposit directly to your Ohio 529 Plan.
Many play options
With basketball, there are many different plays that a team will use depending on their game strategy. Like in basketball, there are many different options on how you can use your Ohio 529 savings depending on your family’s circumstances.
First, Ohio 529 savings can be used for your child’s or grandchild’s college or career training. That means that they can “run the play” and use their 529 funds at most four-year colleges and universities; community colleges; trade, technical, or vocational schools; apprenticeships; and certificate programs.
Second, while you have saved in Ohio’s 529 Plan, you can use those 529 funds coast-to-coast at over 30,000 schools. If your child picks a school in this year’s Western Regional, you can use your Ohio 529 to pay for qualified higher education expenses at that school or any school that accepts federal financial aid. That even includes some programs overseas.
Third, even if your child wants to pivot after high school and do something other than college, you have many options on how to use those 529 funds.
- There is no time clock for when you must use the 529 account so you can hold onto it in case your child changes their mind.
- 529s accounts can also be passed to a 529 account for another family member. Transfers can be made to anyone related by blood, marriage, or adoption. That includes holding onto those 529 funds for your grandchildren.
- You can also make a non-qualified withdrawal from your 529 account. This means that the earnings-only portion of the withdrawal will be taxed on the federal, state, and local level. Like other tax-advantaged saving programs, there will be a 10% federal tax penalty assessed for withdrawing money from the 529 plan for costs that are not qualified higher education expenses. Before you elect to make a non-qualified withdrawal, first talk with your financial advisor or tax consultant to evaluate your options.
- You can use those 529 funds to hit a three pointer for your child’s retirement with the 529-to-Roth IRA rollover. There are prerequisites that must be met to take advantage of this new benefit. You should consult a financial professional or tax advisor regarding the applicability of these rollovers to your personal situation.
Only the best
Only the best teams earn the opportunity to play in March Madness. These teams have worked hard to reach this level of performance on the national level. Likewise, Ohio 529 is ranked as powerhouse team when it comes to your college savings. Morningstar, Business Insider, Time Magazine, Forbes Advisor, CNBC, and other personal financial organizations highly tout Ohio 529 as a good way to save for your children’s college or career training. Among the list of reasons are its tax benefits including a state income tax break for Ohio residents, a great mix of investment options, and a minimum contribution amount of $25 to name a few.
Teamwork makes the dream work
Much of these teams’ success on the court is due to teamwork—operating as one unit for a singular goal. For these teams, that goal is going to THE big game. You have your own team to give you an alley-oop for your education savings goals. Loved ones, family, and friends can all contribute to your Ohio 529 account. Ask for gifts of higher education for your children’s birthdays, holiday celebrations, graduations, special achievements, and other big celebrations. If loved ones ask what gifts that have significance and what gift can last longer than education? A 529 gift contribution is slam dunk.
Ugift is an easy-button gift-giving feature with Ohio’s 529 Plan. After logging in to your Ohio Direct 529 Plan, you can set up an Ugift code to send to our loved ones who would like to give the gift of a higher education. This code allows others to make online gift contributions directly to your CollegeAdvantage Direct 529 Plan without your account number. Once you provide the Ugift code, friends and family can visit Ugift529.com to make their electronic contribution securely from their bank account.
Downloading the READYSAVE 529 app lets you call in the play by sending a Ugift invitation to your family and friends either through a text message, email, Facebook Messenger, Facebook post, or Instagram Message.
Easy savings three-pointer — three tax advantages
Ohio 529 Plan helps families across the nation save money for their children’s future higher education costs with tax benefits. First, grow your 529 account with tax-free earnings. This means all the investment growth is yours to use for your children’s future college costs, and the glory of a completed degree. Compound interest, which is the interest earned on contributions, earnings, and interest already accumulated in the 529 account, is included in the tax-free earnings. Second, when used for qualified higher education expenses, withdrawals from your 529 plan are tax-free. Third, if you are an Ohio resident, then you can deduct 529 contributions from your Ohio taxable income, up to $4,000 per year, per beneficiary, with unlimited carry forward. This means you can continue to subtract $4,000 per year, per beneficiary, from your Ohio taxable income until all your Ohio 529 contributions have been deducted.
So, apply these five lessons from winning basketball teams to your own Ohio 529 account, and see how you can win the savings game with Ohio 529.
Since 1989, Ohio 529 CollegeAdvantage has been helping families across the nation save for their children’s education after high school. An investment in a 529 plan is an investment in your child where every dollar saved today is a dollar that doesn’t have to be borrowed later. Learn, plan, and start with as little as $25 at CollegeAdvantage.com.
