Pay for College with the Ohio 529 Plan
The Ohio 529 Plan, is viewed as one of the best college savings plans out there. We previously discussed in a previous post Best 529 Plans for College Savings how the plan is highly rated.
The idea of saving for a child is not new for parents. Since all states of USA have introduced 529 plan, parents are now interested in saving for the education of their child. In case you do not know, 529 comes from section 529 of the Internal Revenue Code, which states that a qualified tuition program will be exempted from taxation.
Ohio 529 plan is administered by the Ohio Tuition Trust Authority. It is an agency of the state of Ohio Department of Education.
This agency sponsors CollegeAdvantage, a website where you can apply for all these plans.
Ohio Offers Two College Savings Plans
The state of Ohio offers two types of college savings plans. Both offer high value and are a great way to save for your child’s college education.
Ohio’s 529 Plan; CollegeAdvantage:
529 plan is available for residents of any state. It offers 3 age-based options to invest. Age-based options are secure to invest in Ohio 529 plan. It operates in such a way that plan funds are invested in a transitional way.
When a beneficiary, child, is young, these will be invested in risky options, i.e. stocks. Such options offer risks, as well as growth. At this age, these are called risk-based plans.
When a child grows old and gets near to the age of college, plan funds are invested in much less risky options. Thus, investing them in such a way that the child has safe funds. Thus, the Ohio 529 plan has 3 age-based and 5 risk-based options. It is a direct plan and you can sign up by yourself. There is no need for an advisor. You enjoy the facility to open and manage this account online.
Important features of this account:
- Zero Enrollment fee
- No annual maintenance charges
- Automatic funds transfer from your bank account
- You can receive gifts through Ugift.
- Overall costs are much lower
Advisor 529 Plan, Powered By Blackrock:
BlackRock Ohio 529 Plan is the advisor-based plan. This plan is sold via advisors. A professional advisor will help you register and open your account. Ohio’s 529 plan is managed by BlackRock, which is the world’s largest investment firm. Managed by a professional advisor, your account can save for your child. BlackRock offers three investment approaches.
Target date investment options:
To save money for your child, BlackRock adopts this approach in which funds, slowly, start being invested in conservative options as the date of college admissions get closer.
Investment options are chosen considering the age of the beneficiary child and his preferences of college or university.
Target Risk Investment Options:
Risk options feature the constant exposure of funds to fixed income, equity and money market security. They remain the same throughout their life instead of changing over time. The assets are invested in risk level options unless you change the preference.
There are a lot of options such as single strategy, equity and fixed income where you can make your funds safe for the education of your child.
Some specific features of advisor-based Ohio 529 plan are the following:
- Management of your account via an advisor.
- Diversity of investment options.
- No annual maintenance fee for accounts of Ohio residents.
- Professional investment options.
Should You Enroll In Ohio 529 Plans?
Education expenses have become a headache for parents.
A good education requires a lot of bucks. Some parents put that burden on their children when they attend colleges or universities for one or another reason. While many like you try to make their contribution to lessening the burden on their child. You might consider saving money for education. But money freezes here and only grows by your contribution. What about an option where money can breed more money? It is the Ohio 529 plan. Your money is invested, and profits are added.
Ohio 529 plan is the best option you can go for.
You should start investing when they are in kindergarten. Thus, your little cuts can make your child’s life easier. 529 plans are offered in all states. The money saved via Ohio 529 plan can be used at thousands of colleges and universities. Funds invested in these plans put the minimum impact on the financial aid of the child. Your annual income does not matter when you invest in the Ohio 529 plans. The age of the beneficiary does not matter here. Whenever you want to invest in child’s higher education, go for Ohio 529 plans. Families in any state can get the advantage of the Ohio 529 Plan. It is not necessary to be a resident of Ohio State. Even the beneficiary student can get admission in any state and still gets the benefits.
Who Can Contribute?
Your family members can contribute to education expenditures.
Sometimes, grandparents and extended family members are anxiously waiting to add in your account. There can be no better option than the Ohio 529 Plan. You might be the person who wants to contribute to the expenses. Here is the thing for you. Being a resident of Ohio, you can contribute via CollegeAdvantage. You can deduct up to $4,000 from your taxes, per annum, child or grandchild.
You can invest by making your own account or contribute to an existing one.
If you opt for your account, you shall be actively involved in managing and controlling that account. Before the dates of the college approach, you can talk with the parents of your children and make sure that your account is not affected negatively. The process of opening an account can be completed online. However, if you want to contribute in an already existing account, you can do by adding as little as possible and as much as you can. Contribution can be made via online bank transfer. You can gift money through Ugift code provided by the account owner.
Use of Money from the Ohio 529 Plan:
There is always a designated beneficiary. If that child does not attend the college or university, the funds do not go to ruins.
Rather, being an account owner, you can use that money for other children. The funds are redistributed to other children or in multiple children based on the discretion of account owner. The account owner can use the money for his own educational expenditures also.
The funds can be withdrawn for other purposes other than education. But doing so will result in a penalty of 10% deduction on the earnings only. It means that the original money will remain safe while the money earned by investment, will bear a loss of 10%.
Benefits of Ohio 529 Plan
After parting initial information with you, we consider it pertinent to tell you the benefits of saving via the Ohio 529 plan.
Growth without tax:
Investing in Ohio 529 plan can bring growth in your original investment.
Your earlier cut from income and contributions of your family members can breed more money. Ohio tuition trust authority handles it for you. They invest the money and add the profit to your account. But here is a big advantage. This growth is tax-free.
When the beneficiary goes to college, he can pay his tuition expenditures from the account of his Ohio 529 Plan. However, these withdrawals should be qualified. It means that the money withdrawn shall be authorized for those expenses. These withdrawals are without any taxes.
Tax deductions for Ohioans:
If you are a resident of Ohio, you can contribute by deduction of taxes valued $4,000 per year for a child. What else can be great than this? Go for it.
Diversity of investment options:
Investment options are great when it comes to Ohio 529 plans.
Age-based and risk-based options are available for you to consider. Former ensures the safety of investment with steady growth while the latter offers the maximum growth with some risks. It is up to the account owner and other factors. Often risk-based options are availed if the child is young. Hence, there are chances that if the money goes down, the time will heal and bring it to its original position.
Professional Firms are protecting you:
As mentioned earlier, advisor-based plans involve a professional who advises on future investments. In direct plans, professional firms are always to indicate the maximum risk.
Use funds at colleges across the country:
Funds from Ohio 529 plans can be used in all recognized public and private universities of USA. This feature is rarely included when it comes to 529 plans of other states.
Ohio 529 direct plan offers a free account. While other investment options are with zero or little fees. While the same accounts in other states charge enrollment fees which can be high.
Easy to sign up:
Ohio 529 plans are much easier to sign up. Ohio Tuition Trust Authority made it quite easy for account owners to complete the whole procedure online. To begin signing up for the Ohio 529 Plan, you can sign up here: Getting Started.
The future of your child is a few clicks away.
That is all for now.