Every year trusted financial industry investment research company, Morningstar, reviews the nation’s 529 college savings programs. Once its analysis is complete, Morningstar ranks the 529 plans in a report released each November.
Silver ranking
Ohio 529 is pleased to announce that the CollegeAdvantage Direct 529 Plan maintained its silver rating for the twelfth year in a row. In addition, BlackRock CollegeAdvantage, Ohio Advisor 529 Plan was upgraded to a silver ranking. This makes Ohio the only state program with both their Direct and Advisor 529 Plans ranked in a silver or higher college savings programs by Morningstar! The high ranking for both CollegeAdvantage 529 Plans highlights the strength of Ohio’s two plans as well as the industry’s regard for Ohio 529 as one of the best in the nation.
According to the 2024 Morningstar report by Hyunmin Kim, “The 529 industry has made commendable improvements on all fronts, including more sophisticated investment approaches, increased state oversight, and lower fees since we debuted our ratings in 2012… Investors in what Morningstar analysts consider to be the best 529 plans should be well-positioned for the future. It’s important to note that many states provide income tax benefits to education savers. And depending on a saver’s place of residency and unique tax profile (which we do not factor into our ratings), those benefits might be generous enough to make investing in a home state’s plan a worthy choice even if it’s not one we recommend.”
According to Karen Zaya, a Morningstar analyst who wrote the reviews for both Ohio’s Direct and Advisor 529 Plans, “The Ohio CollegeAdvantage 529 Savings Plan's strong investment management teams execute solid strategies with oversight from a dedicated steward. With low fees, this plan earns a Morningstar Medalist Rating of Silver. Strong menu design and thorough portfolio construction research support an Above Average Process rating. The plan offers two glide paths, five static target-risk portfolios, 13 mutual-fund-based individual options, plus two banking choices. … The Ohio Tuition Trust Authority remains a diligent steward, supporting an Above Average Parent rating. Executive Director and Chief Investment Officer Trisha Good has been with the agency since 1996. She spent 13 years as the plan's CIO/CFO before taking her current position in mid-2023. Fees here are generally lower than most other plans.”
For the BlackRock CollegeAdvantage 529 Plan, Zaya says, “The Ohio BlackRock CollegeAdvantage 529 Plan features an exceptional investment management team with a sophisticated approach overseen by a dedicated steward. The plan merits a Morningstar Medalist Rating of Silver, despite the heftier fees typical of advisor-sold offerings. A rich menu and an expertly crafted glide path earn a High Process rating. This plan offers a year-of-enrollment series, 24 individual portfolios, and three target-risk options. The array of individual options suits this advisor-sold plan, providing the opportunity to construct a diversified portfolio… OTTA's management team and investment board collaborate with consultant Wilshire to provide detailed oversight and advocate for education savers in both this and the direct-sold plan.”
Other honors for Ohio’s Direct 529 Plan
Business Insider has placed Ohio’s 529 Plan in their Best 529 Plans for 2024 article. The article stated that, “For a low $25 minimum, the Ohio-based 529 direct-sold savings plan offers a diverse selection of age-based, enrollment-based Vanguard and DFA mutual fund portfolios with tax-free growth. Plus, an individual fund portfolio option. You can also invest in CDs through a Fifth Third Bank savings account ($500 minimum). Single and joint filers can get a tax deduction of up to $4,000 annually.”
Time Magazine has also named Ohio’s 529 Plan on their Best 529 College Savings Plans for 2024 list. Their analysts noted, “Ohio CollegeAdvantage is open to anyone age 18 or older who wants to make tax-advantaged contributions to college savings. There is a state income tax deduction of up to $4,000 per child per year, and there are no restrictions on how many accounts you can open for different beneficiaries. The lifetime contribution limit is well above what other states offer, allowing you to contribute a significant amount toward your student’s education. CollegeAdvantage leans heavily on Vanguard funds, which have a reputation for being exceptionally inexpensive. You can also choose from individual fund options, including bond-focused and equity-based portfolios.”
Forbes Advisor continues to rank 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 continues to select Ohio’s 529 Plan as one of the ten best programs nationwide. As they wrote, “With the CollegeAdvantage (Ohio) 529 plan, anyone can sign up. There’s a good mix of investment options (including FDIC-insured accounts), low fees and plans from top companies like Vanguard, Dimensional Fund Advisors and Fifth Third Bank. There’s just a minimum contribution amount of $25 and Ohio residents can get a tax deduction.”
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.”
Clark Howard has placed Ohio’s Direct 529 Plan on his dean’s list, which is determined by fees and expenses. Only 529 plans with annual fees less than 0.20% are placed on the dean’s list.
Ohio 529 tax advantages
Why save with Ohio 529? CollegeAdvantage helps families across the nation save money for their children’s future expenses 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 and career training 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 or program. Third, an Ohio resident who contributes to a CollegeAdvantage 529 account – whether as the account owner or making a gift – can deduct their 529 contributions from their Ohio taxable income. The deduction is $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 contributions have been deducted.
Not just for four-year programs
While you may have saved in Ohio 529, you can use your funds at both Ohio schools and schools nationwide. 529 plans can be used across the United States at over 30,000 post-secondary institutions, including four-year universities and colleges, two-year community colleges, trade or vocational schools, apprenticeships approved by the U.S. Labor Department, and certificate programs nationwide that accepts federal financial aid.
To confirm that the schools your child wants to attend accepts federal aid, 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 Ohio 529 funds there.
Since 1989, Ohio 529 has been helping families across the nation save for their children’s higher education. Ohio 529 covers qualified costs for your child’s college or career training. Start, add, or give a gift with as little as $25 at CollegeAdvantage.com.
