Education savings plans have always been a great way to provide for future education expenses. NOW (starting in 2024) the balance of the Ohio 529 Plan will NOT count towards education assistance. The FAFSA form per student has been revamped and the above information is not addressed or reported.
Grandparent-owned 529 accounts will not affect the grandchild’s eligibility for financial aid. The account can be used for qualified expenses for whatever type of further education the student is interested in after high school including career training such as technical schools and certificate programs. The plan withdrawals are tax-free when used for qualified expenses. All earnings from the time of inception are TAX-FREE.
The giver (any Ohio resident) can claim the contribution as a deduction from their taxable Ohio income. At present, the limit per year per beneficiary is $4,000, however additional contributions can be carried forward to future years. The earnings are tax free, accumulate and compound. Be sure to give your tax consultant this information at tax time.
For grandparents who are interested in estate planning: the annual gift limits (2024) are $18,000. individually and $36,000. married without involving federal gift tax per beneficiary or grandparent. This amount would compound from date of deposit. There is a Tax Benefit Calculator on the Ohio 529 web site that will show you the difference between a “529” account and a taxable savings account.
These plans can be started for as little as $25.00. You need the beneficiary’s name, date of birth, address and social security number to initiate the program. You will also have the opportunity to select the type of earnings (savings) account you would be comfortable contributing to.
The web site also has answers to other questions you may have regarding the plan.