Daily Court Reporter - News Ohio 529 top of charts for long-term performance
Ohio 529 top of charts for long-term performance
Every parent has long-term plans for their child, dreams to give them hope and a future. Once you held that precious bundle of joy in your arms, you’ve started your long-term plan from them with an Ohio 529 Plan to cover your child’s future higher education expenses. You opened the college savings account as early as possible as you know how important long-term investment performance is to the growth of the 529 plan.
Savingforcollege.com, a trusted college-savings industry resource, provides research on 529 plans, financial aid, scholarships, and tools to estimate college expenses. Savingforcollege.com analyzes the performance of the nation’s 529 plans on a quarterly basis and ranks them. Ohio’s 529 Plan, CollegeAdvantage, consistently receives high ranks for its long-term investment performance.
Ohio’s 529 Plan rankings
As of Dec. 31, 2018, CollegeAdvantage Direct 529 Plan ranked first in the nation for the best performance in five-year category. Ohio’s 529 Plan was also ranked third nationwide for the best performance in the three-year category.
Savingforcollege.com determines a 529 plan’s performance score by comparing seven similar asset-allocation categories between all the nation’s 529 plans, the historical performance of each selected portfolio category, and then averaging the score of all the groupings.
Savingforcollege.com also recognizes Ohio’s Direct 529 Plan as one of the best plans in the nation for both Ohio residents and non-Ohio residents.
Savingforcollege.com also assigns a 5-Cap Ranking to the nation’s college savings programs. A 5-Cap designation is dependent on criteria that shows the college savings plan “offers outstanding flexibility, attractive investment, and additional economic benefits (such as generous state tax incentives) that for some people, at least, will provide a substantial boost to their savings. There are few, if any, weaknesses noted in the program.”
Ohio’s 529 Plan, CollegeAdvantage, is only one of only three 529 college savings plans nationwide to earn a 5-Cap rating for both residents and non-residents. Ohio’s Direct 529 Saving Plan has received this recognition multiple times for the plan’s attractiveness for Ohioans as well as out-of-state residents.
Savingforcollege.com uses these five criteria:
Performance, which is taken directly from Savingforcollege.com’s quarterly performance rankings;
Costs of running a college-savings plan, which includes average asset-based expense ratios, administrator and managerial fees;
Features such as a spectrum of age-based and risk-based portfolios as well as FDIC-insured options, participation in programs like Upromise and Ugift, and contribution restrictions;
Reliability signals such as plan disclosure statements, the ease of making account changes, and the quality and experience of outside program managers; and
Added upgrades for residents of plan’s sponsoring state.
Ohio’s 529 Plan tax advantages
CollegeAdvantage helps families across the nation save money for their children’s future college, vocational, trade, or technical school costs with tax-advantaged benefits.
First, all contributions and earnings grow tax free in a 529 plan, so all investment growth is yours to use to cover college costs. Second, a 529 withdrawal is tax free when used to pay qualified higher education expenses — those costs that are mandatory to attend the federally accredited school or program. Third, a CollegeAdvantage account owner who is an Ohio resident can deduct their 529 contributions from their Ohio taxable income. The deduction is now $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 per year is not a contribution cap. If an Ohio taxpayer contributes $12,000 in one tax year, they will continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions have been deducted.
Tools and calculators
Ohio’s 529 Plan has calculators and tools to shape the 529 plan to best fit your family’s needs. Would you like to receive an estimate on your child’s projected college costs and what monthly 529 plan contribution can help you reach a saving goal? Then use the college savings planner. The cost of waiting tool can approximate how much more money will need to be saved if you get a late start on saving for higher education costs. The tax benefit tool shows the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account. Answer the risk tolerance questionnaire to determine an investment strategy best suited to your comfort level with risk.
College saving strategies
You can review your savings strategy based on your child’s life stage with CollegeAdvantage. If your child just started kindergarten, you have more time to benefit from the power of compound interest, coupled with the tax-free earnings. If your child is in middle or high school, you may want to step up the amount your contributions. Even if your child is in college, you can still take advantage of tax-free earnings to save even more as well as maximize the Ohio tax deduction.
Use Ohio’s 529 Plan nationwide
Any savings in Ohio’s 529 Plan can be used nationwide at any accredited two-year, four-year, graduate or professional, or any other post-secondary schools that accepts federal financial aid. Check to see if the school has a Federal School Code on the Free Application for Federal Student Aid (FAFSA).
Visit CollegeAdvantage online to save for your child’s future training and education. An investment in a 529 plan is an investment in your child as every dollar saved today is a dollar that doesn’t have to be borrowed later. For someday your child is going to college. Someday starts today with Ohio’s 529 Plan.
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.
Ohio’s CollegeAdvantage program provides families across the nation flexible options and educational resources to invest in our trusted tax-advantaged 529 plans for education expenses after high school.
An 11-member board oversees the investments of the Ohio Tuition Trust Authority. The Governor of the State of Ohio appoints six members, with the advice and consent of the senate, who have significant experience in finance, accounting, or investment management.
The Speaker of the House of Representatives of the State of Ohio and the President of the Senate of the State of Ohio each appoint one member of the respective legislative body from each political party.
The Chancellor of the Ohio Department of Higher Education also serves as an ex-officio, voting member of the board.
Date Published: April 24, 2019