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Ohio’s 529 Plan, CollegeAdvantage, is at the top of long-term performance ranking for Saving For College, a college-savings industry resource. Saving For College provides unbiased research on 529 plans, financial aid, scholarships, and offers tools to help families estimate college expenses. Saving For College analyzes the investment performance of the nation’s 529 plans on a quarterly basis and ranks them. Ohio’s 529 Plan has consistently received high marks for its long-term investment performance for your long-term goal of paying for your child’s higher education.

Ohio’s 529 Plan rankings 

Nationwide, 49 states and the District of Columbia offer 529 plans. As of December 31, 2022, the CollegeAdvantage Direct 529 Plan ranks fourth in the nation for the best investment performance in the ten-year category.

Saving For College 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.

Other honors for Ohio’s 529 Plan

If you read financial websites, you will discover the high regard for Ohio’s 529 Plan. Financial industry organizations like Morningstar, Saving For College, CNBC, and Forbes have all rated Ohio’s 529 Plan as one of the best college savings programs in the nation. Here’s what they had to say.

Trusted financial industry investment research company Morningstar annually reviews the nation’s 529 college savings programs. Morningstar then ranks the 529 plans in a report released in November 2022. 

Ohio’s 529 Plan is pleased that the CollegeAdvantage Direct 529 Plan maintained its silver rating for the tenth year in a row. In addition, BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan retained its bronze ranking. This makes Ohio one of only three states that have both their Direct and Advisor 529 Plans ranked as medal-class college savings programs. The high ranking highlights the strength of and the industry’s regard for Ohio’s 529 Plan as one of the best in the nation.

Ohio’s 529 Plan was recently named one of Military Saves Savings Champion for our continual support of this important program. Military Saves is part of the nonprofit Consumer Federation of America and is an initiative of America Saves. Military Saves works with government agencies, defense credit unions, military banks, and nonprofit organizations to promote savings and debt reduction.

Forbes Advisor ranks Ohio’s 529 Plan as one of the six best college savings programs in the nation. According to their explanation: “Ohio’s 529 Plan comes with features in line with the other plans on our list, including low fees, a range of investment options and a tax deduction for Ohio taxpayers. … The plan also comes with a minimum contribution, both to open the account and for each contribution thereafter. But it is small ($25) and likely manageable for many plan participants.”

CNBC also selected Ohio’s 529 Plan as one of the five best programs nationwide. As they wrote, “There isn’t much not to like about the CollegeAdvantage 529 plan — there’s a good mix of investment options (including FDIC-insured accounts), low fees and plans from top companies like Dimensional Fund Advisors. In fact, overall management fees are some of the lowest we’ve seen. Combined with low expense ratios, this makes this plan one of our top picks.”

Money Inc. ranks Ohio’s 529 Plan, CollegeAdvantage, second in its list of the top ten 529 programs nationwide. They highlighted the “tax break for Ohio residents, a diverse selection of investment alternatives, and low fees.”

Ohio 529 tax advantages

Why save in Ohio’s 529 Plan? CollegeAdvantage helps families across the nation save money for their children’s future costs associated with college, vocational, trade, or technical school, as well as apprenticeships, while offering tax-advantaged benefits.

First, 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.

Not Just For Four-Year Programs

529 plans can be used for whatever comes after high school, as higher education takes many forms. This list includes not just four-year universities and colleges, but also community colleges, trade and specialty schools, certificate programs, graduate school, law school, medical school, and now apprenticeships.

Simply put, you can use the funds in your Ohio 529 Plan almost anywhere you are comfortable sending your child and your money. 529 plans can be used at any post-secondary school that accepts federal financial aid. If you want to confirm that the schools your child wants to attend — whether four-year, two-year, graduate, or vocational — accepts federal aid, then do a search to see if the institutions have a Federal School Code on the Free Application for Federal Student Aid (FAFSA). If the schools do, then you can use your 529 funds there.

Also, qualified costs for apprenticeships — such as fees, textbooks, supplies, and equipment like required trade tools — now can be paid with 529 distributions. The apprenticeship program must be registered with the Secretary of Labor’s National Apprenticeships Act in order to use a 529 plan withdrawal. Interested parties can check the U.S. Labor Department’s search tool to confirm that a program is eligible.

Student loan repayments are now a qualified cost for 529 plans. Any student loan that qualifies for the federal student loan income tax deduction can now be paid with a 529 distribution. There is a $10,000 lifetime limit per 529 beneficiary. However, an additional $10,000 can be used to repay qualified student loans for each of the beneficiary’s siblings.

And if your child decides definitively not to earn a higher education, you will have a new option for the 529 funds starting Jan. 1, 2024. Families can give their child a start on their retirement savings. By rolling over leftover 529 funds to a Roth IRA for the same 529 beneficiary without incurring any penalty on the earnings. There will be some requirements to use this new qualified distribution once available. First, a 529 account must be open for the beneficiary for 15 years. Second, the Roth IRA must be for the same beneficiary of the 529. Third, your contributions—which are also known as the principal—must have been in your Ohio 529 account for at least five years before the Roth IRA rollover. Fourth, you can only roll over 529 funds up to the yearly Roth IRA contribution limit, which is $6,500 for 2023. Fifth, the lifetime maximum 529 amount allowed for the Roth IRA rollover is $35,000.

Use Your Ohio 529 Account Nationwide

While you may have saved in Ohio’s 529 Plan, you can use your funds at both Ohio schools and schools nationwide. 529 plans can be used across the United States at any accredited post-secondary school that accepts federal financial aid. To confirm the school’s eligibility, do a search to for a Federal School Code on FAFSA.

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 Estimator. The Cost of Delaying Saving 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.

For more than 33 years, Ohio’s 529 Plan has been helping families across the nation save for their children’s higher education. Ohio’s 529 Plan covers qualified costs at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, or certificate program nationwide that accepts federal financial aid. Learn, plan, and start for as little as $25 today at CollegeAdvantage.  

Posted on May 04, 2023