When I decided to leave the classroom to stay home with our then 9-month-old daughter, my husband was thrilled. But he was also a little worried. Mortgage payments, electric, water, and phone bills… How would we make ends meet on just one salary? And then there was college…
No, not his college, or mine. Thankfully we had that all taken care of by then. He was thinking of college for his little girl. And before we knew it, she started kindergarten, and that question was still on his mind. (I swear we blinked and she was five — time flies!) By then we had two children who would need help with college. That’s when he started doing some research, because, let’s face it, college is expensive!
(This is a sponsored post. All opinions are still 100% my own.)
Thankfully, we discovered CollegeAdvantage 529, a completely doable way for parents to save money for their child’s education.
So what makes a 529 plan better than just putting money in a savings account?
- Your 529 account grows tax-free, and qualified withdrawals are free from federal and state income tax.
- For Ohio taxpayers, contributions to CollegeAdvantage 529 may qualify for a deduction from your taxable income.
- It’s similar to a 401K in that 529 savings plans generally invest your contribution in mutual fund-based investments where your account value is based on investment performance. CollegeAdvantage also offers FDIC insured banking options.
We started an Ohio 529 plan for both of our children when our daughter started kindergarten. It seemed like the right thing to do, making sure there would be something to help her afford college once those school years she was beginning were over. It wasn’t much at first, but knowing we started helped eased both our minds. (The awesome thing is, you can start one with as little as $25 and adjust it over time.)
For families with kids in daycare or preschool, the start of kindergarten is also a great time to start saving for college for the simple reason that the money no longer being paid towards daycare can be invested into your child’s future.
To make things even easier (because life with kids gets busy), we have our 529 plans both set up as an automatic deposit each month, which we can change at any time.
But what happens if your child chooses not to go to college? (After all, none of us can look into the future and know what our kids will decide to do later in life.) If that happens, the account can be transferred to a different beneficiary, if that person is an eligible family member of the original beneficiary. There are no age restrictions on the beneficiary, either. So, for instance, you could transfer it to a spouse to use to further their education.
I should also mention that there are also no income restrictions, which means everyone is eligible to invest in a 529 plan.
Want to know my favorite part?
Others can contribute to the 529 plan via a financial gift option.
So, if the grandparents have a habit of going a wee bit overboard on Christmas presents, you can suggest they contribute to the college savings plan instead of buying everything in the toy aisles this year.
A few new toys are nice, but at some point they just all can’t be played with. College on the other hand? That is a gift that will keep on giving!
Have you started saving for your child’s education? It’s never too late!
Check out the following sites for more information:
CollegeAdvantage is a 529 college savings plan offered and administered by the Ohio Tuition Trust Authority, a state agency. To learn more about CollegeAdvantage, its investments, risks, costs, and other mportant information, read the Plan’s Offering Statement and Participation Agreement available at www.CollegeAdvantage.com. If you are not an Ohio resident or taxpayer, learn if your home state offers state tax or other benefits for investing in its own 529 plan.