Education Savings Programs
CollegeAdvantage
(formerly Ohio Tuition Trust Authority)
CollegeAdvantage is an investment plan operated by the State of Ohio designed to help families save for future college costs. Individuals can start an account with as little as $15 with a maximum lifetime limit per beneficiary of $229,000 (based upon the estimated college costs for seven years at the five highest-priced higher education institutions in the country). This amount will be adjusted annually to reflect changing costs of higher education.
Employees are able to make contributions to CollegeAdvantage via payroll deduction. The program offers five different savings plans. One option is a Guaranteed Savings Fund, which purchases units of future tuition at current prices. The other four savings plans offer a variety of investments depending on the amount of risk you want to assume. The Guaranteed Savings Fund is guaranteed by the State of Ohio to keep pace with tuition inflation and is backed by the full faith and credit of the State of Ohio. Variable Investment Funds are not guaranteed by the state. Beginning in 2002, individuals can make changes to their investment choices one time per year. Visit the CollegeAdvantage page for enrollment materials and information, or download the CollegeAdvantage Savings Program Application and Payroll Deduction Authorization Form.
Coverdell Education Savings Accounts
(formerly known as Education IRAs)
Another option available for education savings is a Coverdell ESA. The limit on annual contributions to a Coverdell savings account for a particular beneficiary has increased from $500 to $2,000. Starting in 2002, qualified expenses will include elementary and secondary education expenses at public, private and religious schools as well as college expenses. Eligible expenses include tuition, fees, tutoring, books, room and board, uniforms, and transportation. Other eligible expenses include the purchase of computer technology or Internet access used by the beneficiary during the years the beneficiary is in school.
Distributions will be tax-free if used for qualified elementary, secondary and higher education expenses. Coverdell ESA contributions are phased out at certain income levels. If you file a joint return, the amount that you can contribute will be phased out if your modified adjusted income is more than $190,000 but less than $220,000. Contributions are not available if your modified adjusted gross income is $220,000 or more. Payroll deduction for Coverdell Education Savings Accounts are not available. See www.savingforcollege.com/coverdell_esas/ or check with the vendor of your choice for more information about Coverdell Savings Accounts.
