Do you remember what you were doing 35 years ago today? We do! On Oct. 2, 1989, the Ohio Tuition Trust Authority started our journey of helping families nationwide save for their children’s college. Since then, we have become more than just a way to save for college. We have grown to help propel students into all sorts of careers, including apprenticeship programs, and trade school. Ohio 529 can now pay for more than just tuition and books. If you are looking for the best way to save for your children’s and grandchildren’s future education, Ohio’s 529 Plan can show how you can cover your dreams for them, no matter what.
Here’s a quick history of how college savings programs and Ohio 529 have grown and expanded during those 35 years.
On Oct. 2, 1989, Ohio House Bill 61 established the Ohio Tuition Trust Authority (OTTA), the agency that administers the state’s college savings program. In the spring of 1990, the first accounts were opened in the Ohio Prepaid Tuition Program, now known as the CollegeAdvantage Guaranteed 529 Savings Plan. In 1996, the Internal Revenue Code Section 529 was established, authorizing states to establish direct and advisor sold college savings plans while offering exemptions for state taxes and tax deferrals for participants who contributed to a state’s 529 program.
In June 2000, Senate Bill 161 was signed into law and OTTA launched CollegeAdvantage on October 2, 2000, with two new 529 savings plans, the Direct and Advisor Plans. As part of the passage of S.B. 161, a state tax deduction also took effect, allowing CollegeAdvantage contributors to deduct up to $2,000 per year, per beneficiary, from their State of Ohio income taxes. In 2001, the federal government temporarily authorized that qualified 529 plan withdrawals would be exempt from federal income tax. This exemption became permanent in 2006. In January 2018, the State of Ohio tax deduction for contributions to CollegeAdvantage increased to $4,000 per beneficiary, per year.
On Dec. 31, 2003, the CollegeAdvantage Guaranteed 529 Savings Plan was permanently suspended to new contributions and new accounts. OTTA continues to service the remaining existing accounts to pay the qualified higher education expenses for the original beneficiaries.
As the college savings industry’s best practices evolved, Ohio 529 mirrored them. This includes enhancing and smoothing out the glide path of our age-based investment options in 2017, 2018, and 2022. These “set-it-and-forget-it” savings portfolios are similar in concept to retirement target-date funds. A glide path determines the asset allocation mix, which is managed through age bands. The asset allocations within the bands will automatically adjust to change out the riskier investments with more conservative ones as the time for your child’s higher education draws near and you need the 529 funds to cover their college and career training costs. The Ohio Direct 529 Plan has two different paths for age-based options – Advantage Age-Based Portfolios (AABP) and Vanguard Ohio Target Enrollment Portfolios.
As the federal government has provided additional qualified higher education expenses throughout the years, Ohio’s 529 Plan has adopted them. A tax-free withdrawal from an Ohio 529 account can now pay for tuition; mandatory fees; computer equipment and related technology as well as internet services; books, supplies, and equipment related to enrollment and class schedule; certain expenses for a special-needs student; qualified apprenticeships costs such as fees, textbooks, supplies, and equipment like required trade tools; K-12 tuition at a public, private, or parochial elementary or secondary school up to $10,000 a year, per child; and payment for principal and interest on certain qualified education loans for the beneficiary of your account or any of the beneficiary’s siblings. In 2024, the newest tax-free 529 distribution allows any unused 529 funds—subject to certain requirements—to roll over to a Roth IRA for the same 529 beneficiary.
As of June 30, 2024, Ohio’s 529 Plan is serving over 676,000 accounts with $17.63 billion in assets under management.
Ohio 529 always strives to best serve our customers’ needs, by offering valuable quality investment products, services, and resources while continually seeking efficiencies to keep costs low.
As we look back over the past 35 years, we want to thank each and every one of you who have trusted us with your savings for the college and career training savings for your most precious assets, your children and grandchildren. We look forward to continuing to support your family in reaching your education goals far into the future.
