Everything You Need To Know About 529 Account Investments
Not sure about using the assets in your CollegeAdvantage 529 account? We can help. Parents just like you have had questions about Ohio's 529 Plan just like yours. Find all your answers about everything from account options to changing your beneficiary.
How can I make contributions to my account?
Electronic Bank Transfer from your checking or savings account
Automatic Investment Plan (AIP) with scheduled recurring contributions
Payroll deduction through participating employers
Check (made payable to the Ohio Tuition Trust Authority)
Rollover from another 529 plan
Rollover from a Coverdell Education Savings Account or a qualified Series EE or Series I U.S. Savings Bond
Exchange from a different CollegeAdvantage Plan
Transfer of cash from an UGMA/UTMA account (Consult with a tax advisor regarding tax consequences)
Ugift® - a way to invite family and friends to give the gift of education
Upromise® - grow your savings even more by linking your CollegeAdvantage Direct Plan to your Upromise account and automatically transferring your Upromise earnings into your CollegeAdvantage Direct Plan (available for the Direct Plan only)
Do I retain control of the account?
Yes. As the Account Owner, you choose your investment options, and you decide when and where the money will be used.
Can I make an investment change in my account?
Yes. You can change the direction of your future contributions at any time. For existing investments, federal 529 law permits you to exchange the assets in your CollegeAdvantage account to a different mix of investment options twice per calendar year.
How can I use the money in my account?
The money in your CollegeAdvantage account can be used for any purpose. However, to qualify for federal tax-free withdrawals on earnings and avoid penalties, the money must be used for qualified higher education expenses for the beneficiary at an eligible educational institution. 1, 2
Can I change the beneficiary of my account?
Yes. You can transfer your account to a "member of the family" 3 of the beneficiary without incurring federal income tax or penalties.
To change a beneficiary, complete the Beneficiary Change Form.
What counts as a qualified higher education expense?
Eligible expenses include tuition, mandatory fees, computer equipment and related technology and services, books, supplies, and equipment required for enrollment or attendance; room and board costs during any academic period the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.
Account owners can also choose to use 529 assets to pay 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.
The Further Consolidated Appropriations Act 2020 includes provisions that 1) allow 529 withdrawals to pay for certain expenses associated with apprenticeship programs registered and certified by the Secretary of Labor under the National Apprenticeship Act, and 2) to pay principal and interest on certain qualified education loans for the beneficiary of your account or any of the beneficiary’s siblings.The loan repayment provisions apply to repayments up to $10,000 per individual. This $10,000 is a lifetime amount, not an annual limit. Withdrawals for student loan repayment and/or apprenticeships can only be made to the Account Owner or the Beneficiary.
What if I receive a refund from my child’s school?
If you receive a refund of funds originally withdrawn from your 529 account, you may re-contribute the funds (up to the amount of the refund) within 60 days after the date of the refund without penalty. The re-contribution must be made by check, not electronically.
Pursuant to recent changes in federal law, which are retroactively effective January 1, 2015 a beneficiary who receives a refund of any qualified higher education expenses from an eligible educational institution may re-contribute funds originally withdrawn from your Account, up to the refunded amount within 60 days after the date of the refund without penalty. A transition rule contained in the federal law permits any such refund received after December 31, 2014 and before December 18, 2015 to be re-contributed at any time through February 16, 2016.
The individual making the re-contribution is responsible for maintaining all documentation linking the re-contribution to the refund from the eligible educational institution. Without such documentation, the original withdrawal may be considered a non-qualified withdrawal by the IRS. You should consult your tax advisor regarding the tax implications (including but not limited to income, gift and generation-skipping taxes) of any refunds and/or re-contributions and any related documentation that you should maintain.
Re-contributions cannot be made to the CollegeAdvantage Guaranteed Plan. If you wish to make a re-contribution, you must direct the re-contribution to an open account in another qualified 529 plan.
Is paying off a student loan a qualified higher education expense?
A provision of the Further Consolidated Appropriations Act 2020 allows for 529 withdrawals to pay principal and interest on certain qualified education loans for the beneficiary of your account or any of the beneficiary’s siblings. The loan repayment provisions apply to repayments up to $10,000 per individual. This $10,000 is a lifetime amount, not an annual limit. Withdrawals for student loan repayment and/or apprenticeships can only be made to the Account Owner or the Beneficiary.
What if my beneficiary decides not to go to college?
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. You also have the option of changing the beneficiary to another “member of the family”3 or taking a non-qualified withdrawal.
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.
Footnotes: Using the assets in my CollegeAdvantage account
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 An eligible school is one that is eligible to participate in federal financial aid programs.
3 Section 529 defines a family member as: a son, daughter, stepson or stepdaughter, or a descendant of any such person; a brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister; a brother or sister of the father or mother; a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law; the spouse of the Beneficiary or the spouse of any individual described above; or a first cousin of the Beneficiary. Gift or generation-skipping transfer taxes may apply. Please consult with your tax advisor for further information.
How do I close my account?
In order to close your Direct Plan Account with CollegeAdvantage, you must liquidate/withdraw the remaining balance in the account you wish to close. The account must be at a zero balance in order to close your account. There are two means in which to close and liquidate your account: 1) complete the Direct Withdrawal Request Form asking for 100% liquidation and to close the account or 2) via your online account access requesting 100% liquidation and to close your account. It is important that if you want the account closed that not only to liquidate the entire balance, but to choose the close option as well. Otherwise, the account will remain open with a $0 balance.
Still have questions?
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