Yep, the person is misinformed or didn’t understand your question. Or, like you and me, he though that the concept was so stupid, that it couldn't possibly be true.
Yep, it seems strange to me that Ohio would forego taxes on income the feds are already taxing. But tax rules are politically motivated. I'm of the opinion that the Ohio 529 plan is simply a favorite with the politicians in Columbus (note the doubling of the contribution deduction).
I was quite flabbergasted when I first read your quote from the Ohio instruction booklet. But clearly, that's what they intended. One though I had was that the change was for simplicity. It was complicated, before, on what qualified for the deduction. Now it isn't complicated.
