Frequently Asked Questions About CollegeAdvantage
You're not alone when it comes to questions about college savings. We've gathered everything you need to know about opening, managing, and benefiting from your CollegeAdvantage 529 account.
What is CollegeAdvantage?
CollegeAdvantage is Ohio’s 529 college savings program designed to help individuals and families save for college in a tax-advantaged way. The Ohio Tuition Trust Authority, a state agency within the Office of the Chancellor of the Ohio Department of Higher Education, sponsors and manages the program. CollegeAdvantage is offered as two plans: the CollegeAdvantage Direct 529 Savings Plan provides a do-it-yourself approach, while the CollegeAdvantage Advisor 529 Savings Plan offered by BlackRock must be opened through a professional financial advisor. Both plans offer advantages including: tax-free earnings,1 diverse investment options, and professionally managed funds. The Ohio Tuition Trust Authority also manages the CollegeAdvantage Guaranteed 529 Savings Plan, which remains closed since December 31, 2003, to new enrollments and contributions.
How does CollegeAdvantage work?
When you open an account in the CollegeAdvantage Direct Plan, you can choose to invest in Ready-Made, Age-Based Portfolios, Ready-Made, Risk-Based Portfolios or one or more other individual investment options based upon your investing preferences, savings goals, and risk tolerance. The choices are yours. The CollegeAdvantage Advisor Plan offers a variety of investment options that you and your financial advisor choose to achieve your college savings goals. All of the contributions made to your account grow tax-free and withdrawals are free from federal and state tax if used for qualified higher education expenses. In addition, State of Ohio taxpayers can deduct contributions up to $4,000 from their Ohio taxable income per beneficiary, per year, with unlimited carryforward of contributions over that amount.
How do I open a CollegeAdvantage account?
The easiest way to open a CollegeAdvantage Direct Plan account is to enroll online at CollegeAdvantage.com. It only takes about 10 minutes. If you prefer to enroll by mail, complete the Account Application form. To open a CollegeAdvantage Advisor Plan account, contact a financial advisor.
How much do I need to open an account?
CollegeAdvantage offers low initial and subsequent minimum contributions of as little as $25. The Fifth Third Certificate of Deposit requires a $500 minimum contribution.
Who can open a CollegeAdvantage account?
Any U.S. citizen or resident alien, 18 or older, with a Social Security number or Tax Identification Number and U.S. street address, can open an account, regardless of income level. Parents, grandparents, other family, and friends can open an account for anyone they choose. You do not have to be related to the beneficiary of your account. You can also open an account to pay for your own higher education. Certain trusts and entities may also open an account.
Who can contribute to a 529?
Anyone2 can contribute to the same CollegeAdvantage account, but total contributions cannot exceed the Account Contribution Limit (see the Plan Offering Statement for the most current limit) for all CollegeAdvantage accounts for the same beneficiary. A contributor who is an Ohio taxpayer, even if they are not the Account Owner, may take the deduction from Ohio taxable income for the contributions they make to a CollegeAdvantage account up to the $4,000 deduction limit.
Who can be a beneficiary?
Any U.S. citizen or resident alien of any age with a Social Security Number can be named as the beneficiary of a CollegeAdvantage account. As the Account Owner, you can designate a child, adult, or even yourself as the beneficiary.
Does my beneficiary have to attend college in Ohio?
No. You can use the assets in your account toward the costs of nearly any public or private, 2-year or 4-year college nationwide, as long as the student is enrolled in a U.S.-accredited college, university, graduate school, or technical school that is eligible to participate in U.S. Department of Education student financial aid programs. In fact, many U.S. colleges and universities now have campuses or locations outside of the country, where money from your account can also be used. A school is eligible if they have a Federal School Code, which can be searched at www.fafsa.gov.
What if my beneficiary does not go to college immediately after high school?
CollegeAdvantage does not require a child to attend college immediately after graduating high school. There are no age restrictions on when you can use your account to pay for college expenses.
Are investments in CollegeAdvantage guaranteed?
Only contributions to and earnings on the Bank Options are insured by the FDIC, up to certain limits. No other investments are insured or guaranteed by CollegeAdvantage or any other entity. Investment returns will vary depending upon the performance of the investment options you choose. The Account Owner bears all risk, including the risk of loss of all investments.
What is Ugift®?
Ugift is an innovative way to invite family and friends to save for college by celebrating occasions, achievements, and events with gift contributions to your CollegeAdvantage Direct Plan account. To utilize Ugift, log in to your Direct Plan account.
What is Upromise® and how can it help me save for college?
Boost your college savings with Upromise®
Upromise® is a free service that helps families save for college. Upromise provides unique opportunities for members to earn cash back rewards for everyday activities such as shopping, dining and more. Rewards are automatically deposited as contributions to your Ohio's 529 Plan, CollegeAdvantage, when you reach $50 in rewards.
Join Upromise for free today:
- Earn $5.29 in bonus rewards when you open a new Upromise account.
- Earn an additional $25 in bonus rewards when you link your first Ohio's 529 Plan account to your new Upromise account.
- Earn additional rewards continuously by shopping online through Upromise.com and dining at over 10,000 restaurants nationwide.
- You’re automatically entered into the monthly Upromise 529 Scholarship drawing of five $529 scholarships.
Upromise is an optional program offered by Upromise, LLC, is separate from the Ohio's 529 Plan, CollegeAdvantage, and is not affiliated with the Ohio's 529 Plan. Separate terms and conditions apply to the Upromise program, and you will be required to read and agree to them at sign-up. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Transfers from Upromise to an Ohio's 529 Plan, CollegeAdvantage account are subject to a $50 minimum.
Upromise and the Upromise logo are registered service marks of Upromise, LLC.
What impact does a 529 plan have on eligibility for federal financial aid?
529 plan assets are counted at different rates for the Expected Family Contribution (EFC) in the FAFSA formula. Current federal guidelines are as follows:
If the student is a dependent, a 529 plan account is considered as the parent's asset (if the Account Owner is the parent or the dependent student). As a result, it will generally be counted at a rate of only 5.64% of its value for the EFC.
If the student is not a dependent and is the Account Owner, the 529 plan account is treated as the student's asset and is generally factored into the EFC at the higher rate of 20%.
In other cases, the account does not count as an asset for federal financial aid purposes. However, a student may have to report distributions received from the account as income for these purposes.
Note: Financial aid programs offered by educational institutions and other non-federal sources may have their own guidelines for the treatment of 529 plan accounts. For complete information about financial aid eligibility, you should consult with a financial aid professional and/or the state or educational institution offering a particular financial aid program, since rules and regulations often change.
1 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
2 If you contribute to an account owned by someone else, you give up all rights to the money contributed to that account.
How do I access tax forms and other account documents?
In addition to your 1099Q tax form, you can also download account statements and confirmations of account activity online. Simply log in, and within two clicks, you can select the documents you need. Watch this short video for all the details.
What tax benefits can I get from CollegeAdvantage?
Earnings grow tax free from federal and state income tax when used for qualified higher education expenses.1 Qualified higher education expenses include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs during any academic period the beneficiary is enrolled at least half-time; certain expenses for a special-needs student; and withdrawals up to $10,000 per student, per year, for K-12 tuition at a public, private, or religious elementary or secondary schools.
Are there any special tax benefits for Ohio taxpayers?
Yes. If you are an Ohio taxpayer, you are eligible to deduct up to $4,000 of contributions per beneficiary, per year from your State of Ohio taxable income, with unlimited carryforward. You do not have to be the Account Owner to deduct contributions from your State of Ohio taxable income. The benefit is per contributor or married couple.
What are the Plan's gift- and estate-tax benefits?
Per federal 529 laws, individuals can invest up to $17,000 ($34,000 for married couples) per beneficiary without incurring any federal gift-tax consequences. You can also contribute up to $85,000 per beneficiary in a single year ($170,000 for married couples) and take advantage of five years' worth of tax-free gifts at one time. (Contributions are considered completed gifts and are removed from your estate,2 but you, as the Account Owner, retain control.) Upon the death of the Account Owner, money remaining in the account will not be included in the Account Owner's estate for federal estate tax purposes. For more information, consult your tax advisor or estate-planning attorney.
1 Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements. See the Plan's Offering Statement and Participation Agreement for more details on qualified expenses.
2 In the event the donor does not survive the five-year period, a pro-rated amount will revert to the donor's taxable estate.
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