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Daily Court Reporter - News Ohio’s Direct 529 plan earns 5-Cap rating once more


Ohio’s Direct 529 plan earns 5-Cap rating once more is a trusted website about college-savings industry. It provides analysis and informational articles on 529 plans, financial aid, and scholarships, as well as tools to estimate college expenses. On July 12, 2017, released their latest 5-Cap Rating rankings. Ohio’s Direct 529 Plan, offered by CollegeAdvantage, once again earned the top 5-Cap Rating for both in-state and out-of-state residents.

5-Cap Rating Criteria For 529 Plans

The 5-Cap Rating is awarded to college savings plans that “offer outstanding flexibility, attractive investments, and additional economic benefits (such as generous tax incentives) that for some people, at least, will provide a substantial boost to their savings. There are few, if any, weaknesses in these programs.”

The rating is based on five criteria:

The performance of the 529 plan;

The costs of running the college-savings plan including expense ratios, administration and managerial fees;

Special features such as a variety of age-based and risk-based investment portfolios as well as FDIC-insured options, contribution restrictions, and participation in programs like Upromise and Ugift which encourage account owners to boost their college savings;

Reliability signals such as plan disclosure statements, the ease of making account changes, and the caliber of outside program managers; and

Extra advantages like tax benefits for any account owner as well as additional tax breaks (Subscription required) for state residents.

Ohio’s 529 Plan ranking

CollegeAdvantage’s Direct 529 Plan is one of only three college savings plans nationwide to receive the 5-Cap Rating for both in-state and out-of-state residents in the most recent ratings. Ohio’s 529 Saving Program has earned this recognition multiple times for the Direct 529 Plan’s attractiveness for Ohioans as well as non-residents.

Earlier this year, analyzed the long-term investment performance of the nation’s 529 plans and ranked them. For the first quarter of 2017, CollegeAdvantage Direct 529 Plan ranked first across the nation for the best performance in five-year category; the previous ranking was second. The Direct 529 plan ranked fourth overall in the nation in the three-year performance, up from sixth place. In the ten-year performance category, the Direct Plan remained at third overall.

What are some of the reasons that Ohio’s 529 Plan ranks so well? CollegeAdvantage helps families across the nation save money for their children’s future college costs with tax-advantaged benefits including tax-free earnings and tax-free withdrawals when requested to cover qualified higher education expenses. Additionally, if CollegeAdvantage account owner is an Ohio resident, then they can deduct 529 contributions from their Ohio taxable income, up to $2,000 per year, per beneficiary, with unlimited carry forward. This means that $2,000 per year is not a contribution cap. The taxpayer can continue to subtract $2,000 per year, per beneficiary, from their Ohio taxable income until all the 529 contributions have been deducted.

To build a 529 plan to best fit a family’s needs, Ohio 529 College Savings Plan offers calculators and tools, which include:

The college savings planner which can estimate the projected college costs and provide a projected monthly saving amount to be placed in a 529 plan to potentially reach a saving goal.

The cost of waiting tool which can approximate how much more money will be needed to be set aside if saving for college is postponed.

The tax benefit tool which will illustrate the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account.

The risk tolerance questionnaire which will explore the account owner’s tolerance for risk to determine an investment strategy best suited to them.

CollegeAdvantage also suggests 529 account strategies as determined by a beneficiary’s life stage:

Baby to toddler: If possible, this is the best time to start saving for future college expenses so the account can grow as long as possible while benefiting from the power of compound interest.

Kindergarten through elementary: This is another good time to start college savings when disappearing expenses like day care costs can be shifted to fund the 529 account while still having compound interest continue to build the account.

Middle school and high school: Savings may need to be accelerated as the cost of college comes in focus. Encourage others to contribute to the account for holidays and milestones in the beneficiary’s life.

College: Tax-free earnings, tax-free withdrawals, and the state tax deduction for Ohioans can still build up the 529 account while funds are being withdrawn for qualified higher education expenses.

The CollegeAdvantage Direct Plan offers a variety of investment options from ready-made, age-based or ready-made, risk-based portfolios; to stocks and bond options to create a portfolio based on an individual’s investing preferences; to FDIC-insured banking options. CollegeAdvantage has partnered with leading investment managers Vanguard, Dimensional Fund Advisors, and Fifth Third Bank to provide these Direct 529 plan investments.

Ready to start with Ohio’s 529 Savings Program? It’s easy to open an account here. Already have an account and would like to make modifications? Log in to a 529 account to update information, perform account maintenance, or increase automatic deposits. CollegeAdvantage is your plan, your way.

Please note: The performance data shown represents past performance, which is not a guarantee of future results.

About the Ohio Tuition Trust

Established in 1989, the Ohio Tuition Trust Authority is a state agency within the Ohio Department of Higher Education. The Ohio Tuition Trust Authority sponsors and administers CollegeAdvantage, Ohio's 529 college savings program.

CollegeAdvantage 529 is available to families in Ohio and throughout the country as a tax-advantaged way to save for the future college expenses of their loved ones. We offer two mutual-fund based plans: the CollegeAdvantage Direct 529 Savings Plan and the CollegeAdvantage Advisor 529 Saving Plan powered by BlackRock.

Investment oversight is provided by the 11-member Ohio Tuition Trust Authority Investment Board.

Date Published: August 28, 2017


Ohio Tuition Trust


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