Ohio 529 CollegeAdvantage is frequently asked is if grandparents can open accounts for their grandchildren. The answer is a most emphatic “YES.” Almost anyone can open a 529 plan for a beneficiary, whether or not there is a family connection.
Many of the grandparents who own or contribute to an Ohio 529 account now may have originally opened an account for their own children. And now, as grandparents, they want to help the next generation reach their higher education goals with Ohio’s 529 Plan. These grandparents have seen how well this college savings program has worked through the years and want all their loved ones to reap the same benefits in the future.
With such a high value placed on education after high school, many grandparents often choose to set up a 529 plan themselves, while others choose to make gift contributions to a grandchild’s existing account. Either choice is a great option!
Grandparent-owned 529 account
It’s simple to open an Ohio 529 account. You can start one online or fill out and mail in the paperwork. As the account owner, the grandparent will make all the decisions regarding the use of the account, such as choosing the investment options, deciding how much to contribute, and when the time comes, making the 529 withdrawals to pay for their beneficiary’s qualified higher education expenses, which include the large required costs like tuition, room and board, rent, fees, books, and for computers any required electronic equipment.
There is good news for grandparents who save for their grandchildren’s future education with a 529 plan! The Ohio 529 account you own will no longer be a factor in the students’ financial aid calculations! Grandparent-owned 529 accounts are no longer be reported on FAFSA as an asset so they will not affect their grandchild’s financial aid eligibility.
A 529 plan grows with tax-free earnings and offers tax-free withdrawals for qualified higher education expenses. Any Ohio resident who contributes to an Ohio 529 Plan can deduct $4,000 per account, per year from their state Of Ohio income tax. This would include family members in Ohio who contribute to the account you’ve established, or your own contributions to an Ohio 529 account that’s already established as an Ohioan. For Ohioans who contribute over $4,000 per account, per year, they can carry forward this deduction to their Ohio adjusted gross income for subsequent tax years until all of their contributions are fully deducted.
So you know, saving in Ohio’s 529 Plan does not mean your grandchild can only attend Ohio schools. 529 plans can be used at any federally accredited educational institution, which is a post-secondary school that accepts federal financial aid. Your grandchild can do a Federal School Code search to see if the schools that they are interested in attending accepts federal aid. If the institutions do, then you can use your 529 funds there, whether it’s a vocational or trade school, apprenticeships, certificate program, two-year community college, four-year colleges and universities, or graduate school.
As the account owner, a grandparent can choose to change the beneficiary of the account if the original beneficiary receives a full-ride scholarship, enlists in the military, or decides not to continue with their higher education. Additionally, if there are any funds remaining in one grandchild’s 529 plan after they complete their higher education, the grandparent account owner can make a tax-free transfer of the surplus into any other family member’s 529 account, whether that’s a sibling or cousin of the original beneficiary, for their pay qualified college expenses. There’s also the option of transferring the grandparent-owned 529 account funds into a parent-owned 529 plan as the time for a grandchild’s higher education approaches. If you choose to do this, you will lose control of the account and the ability to make withdrawals from it.
Be aware that gift tax considerations may come into play depending on the amount of your gift contributions. The current annual gift tax exclusion is up to $19,000 ($38,000 for married couples) per beneficiary, per year, but that amount is inclusive of all gifts to a beneficiary, not just gifts to a 529 account. You can even superfund up to $95,000 per beneficiary in a single year ($190,000 for married couples) and take advantage of five years’ worth of tax-free gifts at one time as part of your estate-planning strategy. As this is a complicated area of tax law and strategies vary from person to person, please consult with a tax or financial advisor for information on this option
If you do choose to set up a 529 college savings plan for your grandchild, select a successor owner for the account to make sure that your 529 account will be directed as you would wish.
Contributing to parent-owned 529 plan
It’s also simple to make a contribution to an existing 529 plan for your grandchildren. Ask your children if they have set up an Ugift code for the account. If they have, you can use the code to make online contributions to the CollegeAdvantage Direct 529 plan account without needing the actual account number or your grandchild’s Social Security number. This code does not expire so you can continue to contribute to your grandchild’s account at any time you’d like. If you prefer to write a check, make sure it’s payable to Ohio Tuition Trust Authority and includes the 11-digit account number.
Again, grandparents who choose to contribute to parent-owned 529 account will enjoy the same $4,000 state income tax deduction for matching contributions to Ohio’s 529 Plan as if they were the account owner.
Ohio’s 529 Plan also offers free cards to send along with your college savings gift, whether it’s a contribution to a 529 plan owned by a grandparent or parent.
Giving the gift of a higher education may not be as exciting as the latest and greatest toy, which would soon be forgotten, but once your grandchild starts their higher education and see how you have spared them from taking on student loan debt, they will be grateful for your generosity.
Visit Ohio 529 CollegeAdvantage to start saving today for your granchildren’s future education. An investment in a 529 plan is an investment in your grandchild where every dollar saved today is a dollar that doesn’t have to be borrowed later. Learn, plan, and start with Ohio 529 today at CollegeAdvantage.
This article was originally posted in September 2020 and has been updated to reflect new information for July 2026.
