When my wife and I had our first child, we decided to get a jump on planning for college expenses. After researching college savings plans and comparing available plans, I decided to open a 529 College Savings Plan in the state of Ohio – the College Advantage 529 Plan. There are several reasons I chose this plan and I thought I would share them with you today.
Why Choose the CollegeAdvantage 529 Plan?
If you plan on saving for college, then consider a tax advantaged college savings account. In addition to the 529 Plan, there is the Coverdell Educational Savings Account (ESA), which is another tax advantaged college savings plan. The 529 plan is more flexible and offers better tax benefits than the ESA, and was a better fit for my needs. You can compare 529 plans and Coverdell ESAs for more information about which type of plan is better for you.
Once we decided to go with a 529 plan, we researched the options available to us, and the College Advantage 529 Plan kept floating to the top of our list.
- Top rated 529 plan. Morningstar rated the CollegeAdvantage 529 Plan as one of the best in the nation due to its excellent mix of quality, low cost funds, and the lack of extra administrative fees found in many other plans. You can read Morningstar’s review for more information.
- Future tax breaks. Contributions to 529 plans are made with after tax dollars and can be withdrawn tax free for qualified educational expenses. This is similar to the benefits of investing in a Roth IRA.
- Potential current tax breaks. OH residents may be eligible to deduct up to $2,000 in contributions per beneficiary, per calendar year, with unlimited carry forward in future years. This plan is still a good option for non-Ohio residents, even without a tax break.
- Transferability. You can invest in a 529 College Savings Plan for yourself, and if you decide you won’t use it, then you can transfer the benefits to another family member. That flexibility is a big reason why I signed up for a 529 plan before our child was born. I may not use it myself, but I can transfer the funds to her when she is ready for school.
Additional Highlights of the Ohio College Advantage 529 Plan
The Ohio College Advantage College Savings plan is open to residents of all states, is rated as “Top 5” in the nation by Morningstar, and features low cost investment options (including several options from Vanguard). It’s even better if you an Ohio resident and are able to deduct our contributions from our state income, but as we mentioned, this plan is open to residents of any state.
Here are some of the other benefits of the Ohio College Advantage 529 Plan:
- No enrollment fees or maintenance fees.
- Open with as little as $25
- Wide variety of investment choices including low cost Vanguard plans (most investments feature extremely low expense ratios).
- Tax breaks on contributions for OH residents
- Open to residents of any US state.
- $25 sign up bonus*.
*$25 Sign up Bonus. From time to time, the Ohio College Advantage Plan offers a sign up bonus for new accounts, or for setting up an automatic contribution plan. Because of the bonus system, we actually opened our 529 plans before our daughter was born, with the intention of transferring the funds to her name when she is older.
How to Maximize the College Advantage Sign up Bonuses
As I mentioned, the sign up bonuses aren’t always available, but when they are, you can often stack them and earn multiple referral bonuses for your family. For example, opening new accounts earned us $200 for our daughter’s education. I opened an account in my name this before our daughter was even born, but I decided to wait until after our daughter was born before opening an account in my wife’s name.
How we earned $200:
- I referred my daughter and I received a $50 referral, she received a $25 bonus. ($75)
- Referred my wife from my daughter’s account. Daughter received $50, wife received $25. ($75)
- Set up an automatic contribution to both accounts; $25 each ($50)
- Total = $200
How to get the $25 College Advantage sign up bonus.
- Open a new College Advantage 529 Savings Plan with a minimum of $25.
- Enter the following referral code: 2534946
- Receive your $25 bonus within 7-10 business days.
Refer friends and family. You can earn $25 for each new account holder you refer. You can also refer your own children to get additional referrals for yourself. For example, you can sign up for an account and get a $25 bonus, then refer your child for another $50 ($25 for your referral, and a $25 bonus). You can rinse and repeat for each child that you have. Each parent can do this, so a family of three can have 6 accounts (Dad for self, for Mom, and for Child; and Mom for self, for Dad, and for Child).
Must use referral code to get the bonus! Remember, to get your $25 bonus, you must use the following referral code! 2534946
Update: The referral program seems to be over at this time. I will update this page if the referral program returns. That said, this 529 plan is annually rated among the best in the nation. I highly recommend it!