12/03/2018

Ohio’s 529 Plan, CollegeAdvantage, Helps Make Saving for College Doable

As financial professionals working with Ohio families to plan, save, and invest for their children’s future, Ohio’s 529 Plan, CollegeAdvantage, would welcome the opportunity to help your clients save for higher education and make college doable.

Along with providing an easy, affordable, and flexible way to save for college, CollegeAdvantage is one of the lowest fee 529 plans in the country. Ohio’s 529 Plan offers a wide variety of investment options — including ready-made age-based and ready-made risk-based portfolios — to allow account owners the opportunity to diversify their investments.

CollegeAdvantage is the only 529 plan that allows Ohio families to deduct their contribution from their state of Ohio taxable income. Up to $4,000 may be deducted each year, per beneficiary, with unlimited carry forward in future years for contributions over $4,000. Any Ohio resident — such as grandparents, other relatives, or family friends — who contributes directly to a CollegeAdvantage account can also claim the deduction. 

Grandparents can own an account, and make larger contributions for estate-planning purposes. 

They can make tax-free gifts up to $15,000 ($30,000 for joint filers). Grandparents might also consider taking advantage of a unique 529 plan benefit: they can lump-sum, super-fund a 529 plan with five years of gifting. Up to $75,000 can be bundled without gift taxes to be placed into a 529 plan, making it easy to pay for future higher education expenses. After making the maximum bundled gift of $75,000, the grandparent would have to wait five years before making additional gift contributions without penalty.

Funds in CollegeAdvantage grow tax-free and are withdrawn tax-free as long as they are used for qualified higher education expenses including tuition, mandatory fees, room and board, books, computers and related equipment and services. CollegeAdvantage 529 plan can be used at any federally accredited school in the country, including four-year, two-year, private or public institutions of higher learning, proprietary, post-secondary vocational and some foreign institutions. In other words, a 529 plan can be used to cover qualified costs at any institution that is eligible to participate in the U.S. Department of Education student financial aid program.

Beginning January 2018, account owners can now choose to use 529 assets to pay K-12 tuition up to $10,000 per student, per year, for enrollment at public, private, or religious elementary or secondary school. If there are multiple accounts for a student, the combined 529 distributions to pay for the K-12 tuition is limited to $10,000 per year.

For more information on how you can assist your clients plan and save for their children’s future college education, visit CollegeAdvantage.com.

Disclaimer:
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.