529 Comparison

529 Ohio College Savings Plan

The Ohio 529 College Savings Plan includes two programs from which to choose.

  • Ohio CollegeAdvantage Direct 529
  • Ohio CollegeAdvantage 529 Advisor Plan

Ohio CollegeAdvantage Direct 529 Plan

The Ohio CollegeAdvantage Direct 529 Plan includes many different investment options, including:
  • Age-based Options
  • Balanced
  • Bank
  • Capital Preservation & Fixed Income
  • Equity

Age-based Options Ohio offers four aged-based investment options, each of which are automatically invested depending on the age of the beneficiary, beginning with a more aggressive allocation and moving towards more conservative investments as the beneficiary approaches college age.

1. Advantage Age-Based Option
2. Vanguard Conservative Age-Based Option
3. Vanguard Moderate Age-Based Option
4. Vanguard Aggressive Age-Based Option

The Advantage Option starts off with as much as 90% invested in domestic or international equities when the child is 5 or under and gradually moves the investments to approach about 90% in fixed income when the student reaches 17 years.

The Vanguard Options also begin more aggressively with 50%, 75% and 100% invested in equities in the conservative, moderate and aggressive portfolios when the student is 5 or under. By the time the beneficiary has reached 17, the mix will be 0%, 0% and 25% in equities, with the remainder in bond funds and short term investments to maintain capital.

Balanced The Balanced options also begin with a specific mix of equities and fixed income, but the difference is these do not change over time. SO, if you want to change investments as the beneficiary grows older, you will need to manually move the funds. There are also four Balanced choices:

1. Vanguard Conservative Growth Index Portfolio
2. Vanguard Moderate Growth Index Portfolio
3. Vanguard Wellington Option
4. Vanguard Growth Index Portfolio

Bank If you are an investor who doesn't like risk, the beneficiary is near college age, or you just would like to diversify some of your 529 investments, then the Bank option may be for you. You can make investments in a 529 CD or a 529 Savings account, both from Fifth Third Bank. They offer guaranteed rates and are FDIC insured. With the CD's, you can choose terms from three months to twelve years. There are no fees and you can open one of the 529 savings accounts with as little as $25.

Capital Preservation & Fixed Income The Capital Preservation Option places your investment in cash, investing in the Vanguard Prime Money Market Fund. This is a good choice for those investors who are risk-averse.
The Fixed Income Options invest most or all the money into bond funds to provide some diversity, while at the same time reducing risk. There are four choices here:

Vanguard Inflation Protected Bond Option uses Treasury Inflation-Protected Securities (TIPS) which offer a lower volatility than bonds.
Vanguard Income Portfolio which places 25% in cash and 75% in three bond funds which attempt to maximize current income, while lowering volatility.
PIMCO Total Return which invests in Investment-Grade Intermediate-Term Bond through the PIMCO Total Return Fund.
PIMCO High Yield Option which invests mostly in high-yield, non-investment grade bonds through the PIMCO High Yield Fund. This option will show a much greater volatility than the others and possibly a higher return.

Equity Options The Ohio CollegeAdvantage Direct Plan also offers eight choices that invest largely in stocks, ranging from small, medium and large-caps, blended, domestic and international and growth or value. These will probably interest those with a long investment horizon, offering the potential for large growth, though losses are also a possibility.

Ohio CollegeAdvantage 529 Advisor Plan

If you are already working with a financial advisor or you would like to, Ohio offers the BlackRock CollegeAdvantage 529 Advisor plan. This 529 plan offers many investment options, just like the Direct Plan, but you can only join this one through a financial advisor. While the tax benefits are the same, the Advisor plan offers the added benefits of professional investment advice, custom portfolios and personal service.

Your investment in one of Ohio's 529 College Savings Plans will grow both state and federal tax-deferred. 529 owners who are Ohio taxpayers can deduct up to $2,000 per year from their Ohio State income tax return. If you own more than one plan for multiple beneficiaries, you can deduct up to $2,000 for each. The deductions for larger deposits can saved and used in upcoming years, so if you invest $6,000 this year, you can deduct $2,000 per year for the next three years. Qualified withdrawals will also be Federal and state tax free. Talk with your tax and financial advisor to see which investment opportunities ar best for you.

For more information on Ohio's 529 plans options, visit http://collegeadvantage.com/.

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