On this Valentine’s Day, fall in love with 529 plans. If you have dreams of a college education for your child, a 529 plan can help you make them a reality. With your dedication to your dream coupled with all the advantages of saving for college in a 529 account, it becomes a powerful combination. Here are four facts to fall for with Ohio’s 529 Plan, CollegeAdvantage.
Fall For 529 Plan Tax Advantages
Ohio’s 529 Plan, CollegeAdvantage, helps families across the nation save money for their children’s future college 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 school. 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 $8,000 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 are deducted.
Fall For “Save Here, Go Anywhere” 529 Plans
Just because you saved in Ohio’s 529 Plan, it does not mean that your child needs to attend an Ohio school. Your 529 college savings plan can be used nationwide at any federally accredited educational institutions – whether for an associate, bachelor’s, graduate, professional, or vocational degree. You can use your account almost anywhere you’re comfortable sending both your student and your money. If the school has a Federal School Code on the Free Application for Federal Student Aid (FAFSA), then the withdrawals to cover qualified higher education expenses at that school will be tax-free.
Fall For The Power of Compound Interest In 529 Plans
It’s never too late or too early to start saving for your child’s future college costs. Any funds you can set aside in a 529 account is money your child won’t have to borrow for their education. However, a good reason to start a 529 college savings fund as early as possible is to take full advantage of the power of compound interest. Compound interest is interest gained on contributions, earnings, and interest already accumulated in the 529 account. It’s a dynamic tool to build a 529 plan. The longer a college savings plan has time to develop, the longer compound interest can add the 529 account.
While compound interest in a 529 college saving plan is a huge advantage, compound interest with student loans is a huge disadvantage. By saving now with Ohio’s 529 Plan and earning interest, your child can avoid paying student loans later with interest. This is why 529 plans are a great alternative to student loan debt.
Fall For Tools To Shape A 529 Plan To Your Family’s Needs
To help you build the 529 account that meets your family’s college savings goals, Ohio’s 529 Plan offers calculators and tools. The College Savings Estimator can assess the projected college costs and provide you an estimated monthly saving goal. The Cost of Delaying Saving Tool can approximate how much money may need to be saved if you have a late start. The Tax Benefit Tool shows the long-term advantages of tax-free growth in a 529 plan compared to a taxable savings account.
Ohio’s 529 Plan also provides 529 account strategies, which are shaped by your by your child’s age. If your child is a baby to toddler, it is a fantastic time to start saving for future college expenses to take advantage of compound interest. During kindergarten through elementary school, disappearing expenses like day care costs can be shifted to fund the 529. When your child enters middle school and high school, you may need to increase your contributions. Even if your child is about to start or has even started college, the tax-free earnings, tax-free withdrawals, and the state tax deduction for Ohioans can still build up the 529 account.
Additionally, you can simplify saving for your child’ future college costs with automatic recurring contributions. In planning to make consistent contributions to a 529 plan, it can be part of your budget and you don’t need to be concerned that you might spend the funds elsewhere. You can align 529 plan deposits with your paydays or schedule monthly contributions. Even small investments can add up to big savings over time through regular automatic contributions or payroll deduction.
Valentine’s Day — or any day — is a great day to show your love to your children and their dreams. Open an Ohio 529 Plan to save for your child’s future training and education. An investment in a 529 plan is an investment in your child. Remember, every dollar saved today is a dollar that doesn’t have to be borrowed which makes Ohio’s 529 college savings plan an excellent alternative to student loan debt. Ohio’s 529 Plan, CollegeAdvantage, is your plan, your way.