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

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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.

college-advantage-529-planOnce 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 Contributions to 529 plans are made with after tax dollars and can be withdrawn tax free for qualified educational expenses.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.

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). For more information, check out the College Advantage Referral FAQ page.

Must use referral code to get the bonus! Remember, to get your $25 bonus, you must use the following referral code! 2534946


Published or updated November 23, 2011.
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{ 11 comments… read them below or add one }

1 Miranda

Thanks for the great overview. The Ohio plan really does look great!

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2 Luke

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.

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3 Ryan

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! :)

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4 Ryan

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.

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5 Kristy @ Master Your Card

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?

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6 My Journey

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!

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7 Ryan

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. :-)

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8 rick

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.

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9 Ryan

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.

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10 Mohammed

Ryan,
i wanted to open this account collegeadvantage savings 529 ohio but looks like the offer expired june 30th, 2010 so is there any other offer such that i can take advantage of? thanks….

Reply

11 Ryan

Mohammed, there aren’t any similar deals I am aware of at the moment. This referral program form Ohio CollegeAdvantage has come and gone multiple times over the last few years, so it’s possible it will return again.

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