It’s back to school time! 2020 has certainly brought lots of unexpected surprises to the educational world. Virtual classes, homeschooling while keeping up with schedules and homework is tough. Parents are truly juggling a lot right now then there is the extra thought about the future and saving for your child’s education.
Starting the conversations about saving for our kid’s future might feel overwhelming; however, there are many benefits to starting one early. Many parents who do not know all options available to them might default to options like a traditional savings account. Ohio’s 529 Savings Program offers a way to save for your child’s college expenses (while growing tax-free).
What is a 529 Savings Plan?
Ohio’s 529 College Savings Program is a tax-advantaged way to save for the future college expenses of your loved ones. While Ohio’s 529 is the Ohio offered plan, families in any state can take advantage.
Your account grows tax-free and qualified withdrawals are free from federal and state income tax.
Parents who put 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 College Advantage’s 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.
This allows you to view the amount you’ll need to save if you want longer to start.
This allows you to look at your college savings goals, projected costs and estimate what you would need to save monthly to meet your goal/objective.
Ohio’s 529 Plan has more than 630,000 accounts and over $10.88 billion in assets. Families throughout the country have trusted this savings plan and enjoyed the tax benefits of saving for college education. Within Ohio’s 529 Plan, you can choose to do it yourself or use a financial advisor.
Here’s other helpful information to get you started with the Ohio 529 Plan.
