We have all seen it, parents holding back the tears as they send their little ones off on their first day of school. Then, in the blink of an eye, they are preparing for the first day of continuing education. Whether it be a traditional four-year college or trade school, preparing for this moment with an Ohio 529 College Savings Plan can help make that send-off a little easier.
As this year’s back-to-school begins, listen to that little voice nagging about looking into a college saving plan. It is never too late to put a plan in action, however, it is best to start early! Even before they know what they truly know want to study. For us, our current aspiration is a “hair saloner dentist.”
After signing our “Hair Salonor Dentist” up for a 529 plan we want to share 5 reasons to consider signing up for Ohio’s 529 College Savings Plan.
What Is An Ohio 529 College Savings Plan
Ohio’s 529 is a tax-free college savings plan offered by Ohio. Families in any state can benefit from Ohio’s 529 College Savings Plan. You’re not required to live in Ohio, nor is your child required to attend school in Ohio to take advantage of of the 529 plan.
529 savings plans generally invest your contribution in mutual fund-based investments where your account value is based on investment performance. Ohio’s 529 also offers FDIC-insured banking options.
How soon can you open an Ohio 529 Plan for your child?
Parents can start saving for their child’s education before they are born! One parent simply opens an account in their own name and transfers it once the baby is born and has a Social Security number.
The Cost Of Waiting Tool Is An Eye-Opener
College is expensive! The sooner you start saving for college, the quicker you can take advantage of compounding interest and the longer you will have to grow your savings. Though it’s never too late to begin, it’s ideal to start saving when your child is young. The Cost Of Waiting Tool will show approximately how much more you will need to save if you don’t start soon!
Parents who are currently putting their tax refunds into a traditional savings account are leaving serious saving potential on the table!
Consider this scenario: In 17 years, 4-year in-state tuition and fees might cost $115,000. If you plug the average federal tax refund for Ohioans – let’s say $2,539, which was the average for Ohioans in the 2018 tax year into Ohio’s 529 College Savings Planner for 17 years, you’re projected* to be able to cover 79 percent of tuition and fees by investing that refund in Ohio’s tax-free 529 plan, versus only 38 percent of tuition and fees if deposited into an everyday taxable bank account.
• *Assumes growth rate of 6% in the 529 plan and a bank savings interest rate of
.09% as reported by the Federal Reserve Bank of St. Louis 1/2020. Also, important
to note that this is only a projection, and individual results could be lower or
higher, much like mutual funds in a 401K plan.
Utilze The College Savings Planner To Help Plan For The Future
This tool is extremely helpful when putting together a long-term plan for planning out goals and determining what is needed to meet the objective. The College Savings Planner will give an inside look at how a tax-advantaged savings option can help, along with how much money to start putting aside.
The key benefit of signing up for the Ohio 529 College Savings Plan is that your account grows tax-free. In addition, qualified withdrawals are free from federal and state income tax.
Ohioans can also utilize a State of Ohio tax deduction of up to $4,000 per child.
It is Easy To Sign Up
Signing up for an Ohio 529 College Savings Plan is simple, which is one of the reasons we love it. While some families choose to work with a professional financial advisor to set up their account, many families opt to do it themselves.
Ready-made portfolios allow families to pick a plan that best suits their needs, or create their own individual investment options. This includes FDIC-insured banking options. -Ohio’s 529 partners with leading investment managers Vanguard, Dimensional Fund Advisors, Fifth Third Bank, and BlackRock (Advisor Plan) to bring families the best choices.
In addition, if your investment preferences or goals change, you can make changes twice yearly.
The 529 College Saving Plans Are Not Just For 4-Year Programs
A key reason we invested with Ohio’s 529 plan is that the funds can be used for educational programs outside of a four-year program. It is difficult to determine what area of study your child will wish to pursue. Therefore, investing in a plan that can provide funds to trade schools is vital. A perfect example is we can utilize our 529 funds to help cover cosmetology schools for our future “Hair Saloner!”