You want to make the smartest decision possible in all aspects of your life. When you start saving for your child’s or grandchild's education after high school with Ohio’s 529 Plan, CollegeAdvantage, you select which investment options you would like to invest your funds.
Ohio’s 529 Plan offers a diverse range of investment options to build your college-savings strategy. These 529 saving options include ready-made target enrollment portfolios, ready-made risk-based portfolios, individual investment options, and FDIC-insured banking options, all provided from our partners and leading investment managers—Vanguard, Dimensional Fund Advisors, and Fifth Third Bank. Ohio’s 529 Plan also offers tools to help you shape the college savings plan that right for your family’s needs.
If you are wondering in which investment options other account owners have selected to save for college, here’s our latest “Top Ten List.” These portfolios hold the largest balances of customers’ Direct Plan accounts, for the fourth quarter of 2023.
Top 10 investments options in the Ohio Direct 529 Plan
The top 10 investment options with the highest value of assets under management (fund balances in millions, as of Dec. 31, 2023) are:
- Vanguard Ohio Target Enrollment Portfolio (ready-made age-based portfolio), $3,592.25.
- Vanguard 500 Index Option (individual investment option), $1,316.95
- Advantage Age-Based Portfolio (ready-made age-based portfolio), $1,131.27
- Vanguard Aggressive Growth Index Portfolio (ready-made risk-based portfolio), $818.40
- Vanguard Growth Index Portfolio (ready-made risk-based portfolio), $378.27
- Vanguard Wellington Option (individual investment option), $327.52
- Vanguard Extended Market Index Option (individual investment option), $299.60
- Vanguard U.S. Growth Option (individual investment option) $271.89
- Vanguard Moderate Growth Index Portfolio (ready-made risk-based portfolio), $238.48
- Vanguard Interest Accumulation Portfolio (individual investment option), $232.37
Ohio’s 529 Plan can be used for whatever education comes after high school at any institution that accepts federal financial aid, including trade and specialty schools, apprenticeships, community colleges, certificate programs, four-year universities and colleges, graduate school, law school, and medical school.
Save in Ohio for 529 tax benefits
There are many reasons why to save for your child’s future higher education in Ohio’s 529 Plan, especially the tax benefits.
First, earnings in a 529 plan are tax-free, so all investment growth, contributions, and compound interest are yours to cover qualified costs.
Second, 529 plan withdrawals to cover qualified higher education expenses are made tax-free for federally accredited programs. These expenditures include tuition; room and board (on and off campus); mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student. Qualified expenses for accredited apprenticeships — like fees, textbooks, supplies, and equipment like required trade tools — can be paid with 529 withdrawals. Also, student loan repayment is also a 529 qualified withdrawal. Any student loan that qualifies for the federal student loan income tax deduction can now be paid with a 529 distribution. 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. 529 accounts can also be used to pay K-12 tuition up to $10,000 per student, per year, for enrollment at public, private, or religious elementary or secondary schools. And starting in January 2024, any remaining in a 529 after the beneficiary has finished their higher education can be rolled over to a Roth IRA for the same beneficiary, provided certain requirements have been meet.
Third, Ohio residents who contribute to Ohio’s 529 Plan can deduct their contributions from their taxable state income. This deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward, which means that the $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions are deducted.
Honors for Ohio’s 529 Plan
If you read financial websites, you will discover the high regard for Ohio’s 529 Plan. Financial industry organizations like Morningstar, Investopedia, CNBC, and Forbes have all rated Ohio’s 529 Plan as one of the best college savings programs in the nation. Here’s what they had to say.
Investopedia has picked Ohio’s 529 Plan as its best 529 plan for 2024 for our high performance ratings, age-based or customized portfolios, competitive fees, and FDIC-insured savings accounts and CDs. In their overview, Investopedia stated, “There are a lot of reasons to like Ohio’s CollegeAdvantage 529 plan—and a history of generating above-average returns is certainly one of them. According to performance reviews from Savingforcollege.com, the program is tops in the nation for 10-year returns. There’s no shortage of investment choices here, either. You can choose an age-based portfolio that becomes more conservative over time or a static risk-based portfolio that doesn't change its asset mix over time. You can also customize your basket of investments by choosing your own mix of stock and bond funds. The plans include funds from Vanguard and Dimensional Fund Advisors, as well as Federal Deposit Insurance Corporation (FDIC)–insured certificates of deposit (CDs) and bank accounts. From a fee standpoint, Ohio’s plan is one of the best around. Age-based options range between 0.15% and 0.31% annually, well below the national average. And risk-based and individual options are all 0.44% or less. No doubt that Ohioans have a strong incentive to sign up, with state tax breaks of up to $4,000 per beneficiary per year. However, with a stellar track record, numerous investment options, and low fees, people outside the Buckeye state will want to take notice as well.”
Trusted financial industry investment research company Morningstar annually reviews the nation’s 529 college savings programs. Morningstar then ranks the 529 plans in a report released in November 2023. CollegeAdvantage Direct 529 Plan maintained its silver rating for the eleventh year in a row. In addition, BlackRock CollegeAdvantage, Ohio’s Advisor 529 Plan retained its bronze ranking. This makes Ohio one of only two states that have both their Direct and Advisor 529 Plans ranked as medal-class college savings programs. The high ranking highlights the strength of and the industry’s regard for Ohio’s 529 Plan as one of the best in the nation.
Ohio’s 529 Plan was named one of Military Saves Savings Champion for our continual support of this important program. Military Saves is part of the nonprofit Consumer Federation of America and is an initiative of America Saves. Military Saves works with government agencies, defense credit unions, military banks, and nonprofit organizations to promote savings and debt reduction.
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.
Since 1989, Ohio’s 529 Plan has been helping families across the nation save for their children’s higher education. Ohio’s 529 Plan covers qualified costs at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, or certificate program nationwide that accepts federal financial aid. Learn, plan, and start for as little as $25 today at CollegeAdvantage.
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