Ohio 529 Excels with Silver Ratings for College Savings Plans

Ohio 529 Achieves Recognition Among Top College Savings Plans

Ohio 529, CollegeAdvantage, has made headlines recently about its impressive performance in college savings programs. As families strive to save for their children's education, knowing which plans will best support long-term goals becomes crucial. Ohio 529 is proud to announce that both its CollegeAdvantage Direct 529 Plan and the BlackRock CollegeAdvantage Ohio Advisor 529 Plan have received Silver ratings from Morningstar in their Medalist Ratings. This recognition highlights Ohio as a unique state program with both a Direct and Advisor 529 Plan ranked silver or higher, making it stand out on the national stage.

Growing Importance of College Savings Programs

The rise in the number of parents saving for college—74% in 2024 compared to 58% in 2007 according to a recent study—reflects a shift in priorities. As college costs keep escalating, parents are not only considering whether to save for higher education but also where to place their funds. Ohio 529 has garnered attention for its low fees, diverse investment portfolios, and strong stewardship, appealing to families eager to secure a bright academic future for their children.

Morningstar's Praise for Ohio's 529 Options

Morningstar emphasized the Ohio Direct 529 Plan's merits, particularly its low fees and well-structured portfolio options. Even though the BlackRock Advisor 529 Plan has higher fees as typically seen with advisor-sold plans, it offers a vast selection of portfolios that align well with sophisticated investment strategies.

Insights from Morningstar Analysis

Hyunmin Kim, a manager research analyst at Morningstar, acknowledged that in this year's assessment, over half of the evaluated plans improved significantly, receiving a Bronze rating or better. The analysis centers on well-constructed portfolios, effective oversight, and the experience of management. Morningstar's focus ultimately aids families in identifying the optimal plan options available for funding educational aspirations.

Tax Benefits and Incentives for Contributions

For Ohio taxpayers, such as parents, grandparents, and other relatives, contributing to an Ohio 529 account presents a lucrative opportunity to assist loved ones in their academic pursuits. Contributors can potentially claim a tax deduction of up to $4,000 per beneficiary from their Ohio taxable income. Notably, account earnings are exempt from taxes, and withdrawals used for qualified education expenses are shielded from both federal and state tax.

In light of these benefits, all contributions for 2024 must be received before 4 p.m. EST on December 31, allowing for meaningful gifts toward lifelong learning.

New Flexibility: Rolling Over Unused Funds

Ohio 529 account holders can now breathe easier regarding unused funds. Recent updates introduced the option to roll these funds into a Roth IRA, leveraging the provisions of the Secure 2.0 Act of 2022. Such rollovers are now tax-free and penalty-free, subject to specific regulations.

Trisha Good, executive director of Ohio 529, expressed that this new feature substantially increases flexibility for account holders, particularly if their child opts not to pursue further education or if financial aid covers educational costs. This means families can better prepare their children for both education and retirement savings.

Qualified Uses for Ohio 529 Funds

Ohio 529 funds can be utilized at a wide spectrum of qualified higher education institutions. These include four-year colleges or universities, two-year community colleges, trade schools, apprenticeship programs, or certificate courses. Furthermore, funds can aid in covering expenses such as tuition, fees, accommodation, educational supplies, and even student loan repayments, demonstrating the plan's versatility.

Background of Ohio 529 and Its Authority

Ohio 529, CollegeAdvantage is managed by the Ohio Tuition Trust Authority (OTTA), an agency beneath the Office of the Chancellor of the Ohio Department of Higher Education. Impressively, Ohio ranks as the seventh-largest state sponsor of 529 plans in the United States, maintaining approximately $18.2 billion in assets with more than 675,000 accounts established. Savvy savers are encouraged to explore and establish their accounts with Ohio 529 today.

Frequently Asked Questions

What is the significance of Ohio 529's Silver rating?

The Silver rating from Morningstar indicates that Ohio 529's plans are considered highly effective in helping families reach their education financing goals.

How can contributions to Ohio 529 benefit taxpayers?

Contributors to Ohio 529 can claim tax deductions up to $4,000 per beneficiary on their Ohio taxable income, enhancing the financial incentive to invest in a child's education.

What flexibility do families have with Ohio 529 funds?

Ohio 529 offers the ability to roll over unused funds into a Roth IRA tax-free, providing more options for families if educational plans change.

What types of institutions can Ohio 529 funds be used for?

Funds can be applied to various institutions, including four-year universities, community colleges, trade schools, and even for student loan repayments.

Who manages the Ohio 529 Plan?

The Ohio 529 Plan is managed by the Ohio Tuition Trust Authority, a state agency ensuring efficient management of 529 savings accounts and investments.

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