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YouTubeThough my little guy is only 3 months old, I want to get started with College planning and take advantage of the free $50 that I can get for signing up for the Ohio College Advantage 529 plan. Has anyone else signed up for one? It looks like you can choose to manage the account yourself and they make it pretty convenient to put money in it. Apparently Ohio has the topped ranked plan in the US. Anyone else have comments on how this has worked for them?
Columbus Underground Messageboard » General Columbus Discussion » Q&A
Any experience with the College Advantage 529 Plan?
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Likes Old Houses
Harrison West
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Posted 6 months ago # -
Mister Shifter
Lewis Center
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I opened one for my son through my local bank (PNC) a couple of months ago. The company they use is called Blackrock. I don't have any specifics in front of me, but it was very easy to set up and I'm able to manage it online.
Posted 6 months ago # -
brettcbrown
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I have a 3 week old son and have started investigating some of these options as well. You can manage a 529 yourself in the sense that you can pick from a selection of mutual funds to contribute to, but you are not able to invest in individual stocks. If you want a hands off approach as far as the investments go I think a 529 would be the best option. The biggest downside I'm seeing to the 529 is that if for whatever reason you end up not using that money for qualified college expenses you get hit with a 10% penalty to withdraw the money. (If your kid gets a full ride though you can withdraw that same amount of money without a penalty).
Another option with tax advantages would be to open a Roth IRA for yourself and I believe you can make withdrawals from that to pay for college expenses. You would get the same tax advantages in a Roth IRA in that your money will grow tax free. Advantages I'm seeing for a Roth IRA are that you can invest in specific stocks and if your kid doesn't go to college you can keep that money for your retirement without taking a 10% penalty on your profits (assuming you have profits).
I still have some research to do on these to make sure I understand all the ins and outs, but I don't think you can go wrong with that tax benefits provided by a 529, that's probably what I'm leaning towards.
Posted 6 months ago # -
brettcbrown
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You make after tax contributions to a 529, like a Roth. Gains are not taxed.
Posted 6 months ago # -
pez
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Well an immediate 50% return is worth something, even if it's only on $100, plus the Ohio plan is pretty good. I just tossed the insert from the last statement we got, but here are some of the benefits I know of:
Funds do not need to be used in Ohio.
Contributions up to $2000 per child are deductible from your state income tax, amounts over that can be deducted in subsequent years.
Anyone can contribute and if they are an Ohio resident, they can take advantage of the tax deduction.
The money grows tax free, can be withdrawn tax free for qualified education expenses and can be transferred to another family member.
You can choose funds or pick an automatic option based on age.
Posted 6 months ago # -
rothiraexpert
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Another option with tax advantages would be to open a Roth IRA for yourself and I believe you can make withdrawals from that to pay for college expenses. You would get the same tax advantages in a Roth IRA in that your money will grow tax free. Advantages I'm seeing for a Roth IRA are that you can invest in specific stocks and if your kid doesn't go to college you can keep that money for your retirement without taking a 10% penalty on your profits (assuming you have profits).
Assuming Likes Old Houses won't be older than 59.5, when the kids start college, roth ira is not a good option.
First, only contributions are tax free. If the college costs are higher than contributions, and earnings need to be used to pay for tuition, books and so on, earnings will be taxed with 10% penalty.
Second, Roth IRA withdrawals will be considered as income when kid will apply for financial aid.
Posted 6 months ago # -
johnwirtz
Evanston, IL
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Mister Shifter said:
I opened one for my son through my local bank (PNC) a couple of months ago. The company they use is called Blackrock. I don't have any specifics in front of me, but it was very easy to set up and I'm able to manage it online.Wasn't that the name of the evil private security firm on 24 several seasons back?
Posted 6 months ago # -
btmarquis
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brettcbrown said:
You make after tax contributions to a 529, like a Roth. Gains are not taxed.Just to clarify, contributions are after Fed tax but get a state deduction. From College Advantage website, "If you are an Ohio resident, you can deduct up to $2,000 from your state of Ohio taxable income per Beneficiary, per calendar year. CollegeAdvantage is the only 529 plan that allows Ohio taxpayers to deduct their contributions from Ohio taxable income."
And gains are not taxed (Fed and state), but only if used for higher education expenses.
Posted 6 months ago #
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