Comments on: Ohio College Advantage 529 Plan Overview and $25 New Account Bonus

By: Ryan

Ryan — Sun, 20 Dec 2009 15:47:32 +0000

Rick, To be honest, I’m not certain. Qualified expenses usually include items such as tuition, room, board, books, lab fees, and computers.

Here is the IRS page that discusses qualified higher education expenses in more detail – http://www.irs.gov/pub/irs-pdf/p970.pdf

Be sure to check your 529 plan for more details.

By: rick

rick — Sun, 20 Dec 2009 15:33:54 +0000

my daughter is going out of state for college. she needs a car for that. can i use my funds to help purchase a car.

By: Ryan

Ryan — Sun, 22 Mar 2009 17:48:30 +0000

My Journey: Very true, but there are quite a few states that don’t have any income taxes, and some states that offer little to no tax incentive for contributing to a 529 plan. it always pays to investigate your options.

By: My Journey

My Journey — Sat, 21 Mar 2009 04:48:14 +0000

Someone sort of mentioned it above, but I think it is important to reiterate that most states offer their own 529 plan, and by participating in that plan (as opposed to Ohio State) you are LIKELY to get some sort of State Income Tax Deduction.

For Example – in NY you get up to a $5,000 deduction for $$$ put into a NY 529!

By: Ryan

Ryan — Wed, 18 Mar 2009 11:18:03 +0000

Kristy: The way it is set up leaves room for people to take advantage of this offer by opening multiple accounts. Abuse, though depends on how you look at it. I could open a 529 for myself and for my wife with the idea that one or both of us may go back to school, and my wife could also open an account in each of our names. Then when our child arrives, we can both open an account for our child with the intent that the money is used for our child’s education. That would be 6 accounts for our family of three, and over $200 in referrals and bonus money. Should neither my wife or I use our account, we can use those funds for our child’s education when the time arrives. My wife and I plan on using our accounts to save for college education and having multiple accounts gives us a lot of flexibility in how we do that.

However… there is no time limit for when you make the withdrawals, so people are able to open accounts just to get the $25 which they plan to immediately withdraw (subject to taxes and a 10% penalty). Some people may look at that as abuse if they have no intention of ever funding the accounts beyond the initial requirement for the $25 bonus.

By: Kristy @ Master Your Card

Kristy @ Master Your Card — Wed, 18 Mar 2009 10:37:49 +0000

2million wrote about this on his blog and the reality is that since anyone can open a 529 plan for anyone, that $25 referral and bonus thing can be totally abused. I think that people looking to get into this program with the right intentions should take full advantage of the offer, but it does leave room to game the system. On the one hand, I can see the appeal. If Ohio’s making it available then why not take advantage. On the other, I don’t think gaming the system is a good way to build the account. I don’t know all the rules though, can you consolidate all those accounts if they’ve got different beneficiaries? I know you can change the beneficiaries, but I don’t know the rule on those Ohio accounts. Also, is there a time frame that an account must be kept open to keep the referral and bonus?

By: Ryan

Ryan — Tue, 17 Mar 2009 18:49:36 +0000

Luke, it sounds like you have a better deal with the tax benefits in your state. The OH plan isn’t for everyone, but it can’t hurt to look into it!

By: Luke

Luke — Tue, 17 Mar 2009 18:23:32 +0000

Thanks for the great overview!

I have thought about the Ohio Plan, but since I live in Indiana and there is a 20% tax credit for contributions to the Indiana plan, I have been putting my money there.