Happy 2025! We’ve all started a new chapter with the new year, so now is the time to move forward with your resolutions for the year. These could range from resolutions to improve your own or your family’s health, to travel, to read more, or to plan for your children’s future.
Ohio 529, CollegeAdvantage, is here to help you with whatever dreams you have for your children’s or grandchildren’s college and career training. A 529 account is the best way to save for their education after high school with tax advantages, flexibility of use to pay for qualified costs, and the thousands of different institutions where you can use an Ohio 529 account.
What is a 529 plan?
Established by IRS Section 529 of the Internal Revenue Code in 1994, a 529 account is like a Roth IRA or Roth 401k as you contribute your after-taxed dollars to different investment options within the plan. 529 plans are set up to help families save for their children’s and grandchildren’s education after high school with tax advantages and investment option growth. And saving in a 529 plan won’t harm your chances of receiving federal financial aid, unlike other savings approaches.
Tax advantages for 529 savings
For Ohio 529, CollegeAdvantage, there are three tax advantages to keep your account growing!
First, earnings in a 529 plan grow tax-free, so all investment growth will be yours to spend on your children’s future education. Compound interest — the interest earned on contributions, earnings, and interest already accumulated in the 529 account — is included in the tax-free earnings. And the earlier to set up your Ohio 529 plan, the longer all that compound interest will grow your account. Basically, it means the money you made is making even more.
Second, 529 withdrawals are also tax-free when used to pay qualified higher education expenses.
Third, If you are an Ohio taxpayer, contributions to CollegeAdvantage may be deducted from your Ohio taxable income in any amount up to $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 per year is not a contribution cap. If you contribute more than $4,000 in a calendar year, any amounts over $4,000 may be deducted in future years with unlimited carry forward. You can still deduct in increments up to $4,000 per year, until all 529 contributions have been deducted. If you have an Ohio College Advantage 529 account for each of your children, you can claim the deduction to your Ohio taxable income for contributions made to each beneficiary’s account. Non-account owners who are Ohio taxpayers qualify for this tax deduction when they give gifts for college directly to CollegeAdvantage accounts.
Qualified costs
There is a wide range of what you can pay for tax-free with a 529 account, showing its flexibility of use. Qualified expenses include:
- Tuition.
- Room and board, which can include rent for off-campus residency and groceries (non-taxable items), provided these costs are equal or less than the same room and board allowances as the school.
- Mandatory fees.
- Computer equipment and related technology as well as internet services.
- Books, supplies, and equipment related to enrollment and class schedule.
- Certain apprenticeships costs — fees, textbooks, supplies, and equipment, including required trade tools. The apprenticeship must be registered.
- Federal student loan payments. 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.
- K-12 tuition up to $10,000 per student, per year, for enrollment at public, private, or religious elementary or secondary school. If there are multiple accounts for a student, the combined 529 distributions to pay for their K-12 tuition is limited to $10,000 per year. Consult your qualified tax advisor for specific information.
- Roll over Ohio 529 funds to a Roth IRA for the same 529 beneficiary without incurring any penalty on the earnings. Certain criteria must be met to use the Roth IRA rollover.
Save in Ohio 529, use it nationwide
While you may have saved in Ohio 529, you can use your funds at both Ohio schools and schools nationwide. Ohio 529 is here to help you pay for their college and career training. You can use your Ohio 529 account across the United States at over 30,000 post-secondary institutions, which included 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. If the school that your child wants to attend has a Federal School Code on the Free Application for Federal Student Aid ( FAFSA), then you can use your Ohio 529 plan there tax-free.
The bottom-line benefit of Ohio 529? It’s far cheaper to save money and earn interest in an Ohio 529 account now than pay off student loans with accumulated interest later. With all the tax benefits offered with Ohio 529, your account can grow to reach your education savings goal. Ready to start saving? Learn, plan, and start for as little as $25 today at CollegeAdvantage.
