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If you have children or grandchildren and have the soaring costs of college education on your mind, you might want to consider a 529 plan as part of an overall long-term savings strategy.


First, make sure you are contributing a portion of your income to your own IRA or 401K. These offer special tax advantages, and your contributions may be matched by an employer. There are alternatives to funding college that aren’t available to fund your retirement.

And this is good because the cost of college isn’t going to be cheap. According to the College Board’s latest “Trends in Higher Education” report:

  • “Average published tuition and fees for full-time out-of-state students at public four-year colleges and universities increased 3.3%, rising from $22,223 in 2013-14 to $22,958 in 2014-15.
  • Average published tuition and fees at private nonprofit four-year institutions increased 3.7%, rising from $30,131 in 2013-14 to $31,231 in 2014-15.”

Qualified Tuition Plans, or 529 plans, offer some advantages over Minor (or UTMA) accounts. You retain control of the disbursement of the funds in a 529 whereas the UTMA must transfer completely to the beneficiary at age of majority. Investments in a Qualified Tuition Plan grow tax-deferred, and withdrawals are tax-free as long as they are used for qualified education expenses. Also, Ohio allows you to deduct up to $2,000 per year, per beneficiary on your state taxes (this deduction is not available by using another state’s plan). Funds can be used for any accredited college or university in the country.

Another advantage of these plans is the availability of professional management. CollegeAdvantage, Ohio’s 529 plan, offers an array of professionally managed strategies such as aggressive, moderate, conservative or age-based plans. The latter is managed more conservatively the closer the child gets to college. An UTMA will require you to select the investments yourself–which may not be feasible for you.


However, you should not let your savings plan be limited to 529 plans. The key is getting started early and saving plenty. Check out these college savings tools and calculators to see how much you should be saving based on the age of your child(ren).

Sometimes, navigating all of your options requires a bit of guidance. If you need help creating and administering these plans, contact us.

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