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As parents, we’ve done smart things and not so smart things. However, signing up for NY’s 529 College Savings Plan right after the birth of my son, almost 13 years ago, is one of the smartest things we’ve done. If you’re not familiar, a 529 plan is a type of investment account you can use for college savings. 529 plans are usually sponsored by the state you live in and offers signifcant tax savings. Your earnings grow federally tax-deferred, qualified withdrawals that are tax-free,* and some states (like New York) have other tax benefits as well.** After the birth of our next two children, we also made sure we opened NY 529 College Savings Plans for them. While we weren’t always flush with cash, we made it a priority to set aside money for their future. And both sets of grandparents gave contributions. And the best part? We’ve saved so much that we can afford to spend a little on ourselves now! We are planning a big family vacation for next February and we also make sure we spend some fun days together in New York City. Why We’re Not Worrying About Saving For College
We met up with friends and headed to the NYICFF’s showing of Teen Titans Go Movie.
After the movie, we decided to treat the kids to pancakes at Big Daddy’s Park Avenue South Location. The last time we were at a Big Daddy’s was when we were potty training Skylar several years ago. By saving so much by contributing to our 529 Plans, we have some extra cash to eat out more and today pancakes were on the menu!
We love the bright and kitschy decor.
But their pancakes are legendary. My daughter wanted the chocolate chunk silver dollar pancakes and my son wanted OREO pancakes.
Big Daddy’s was kind enough to make us a kid-sized serving of the OREO pancakes, as my little guy would have never finished the regular $13 version.
If you’re wondering, here’s some more info about 529 College Saving Plans.
529 College Savings Plan F.A.Q’s
Other people can contribute!
Contributions to a 529 plan make a great gift for your kids. Our family has contributed to the account by giving us a check and we deposit it, but you can also do it by sharing a special code that you generate for them. Learn about that here: https://www.ugift529.com/home.html
Who can open a 529 plan account?
Anybody can open a 529 account for a child as long as they are a U.S. Citizen or a resident alient. The account owner will manage the account by picking the investment, designating the child as the beneficiary and determine how the money is used. New York State taxpayers will also get a tax deduction.
How can I use the money in a 529 account?
529s can be used for tuition, books, supplies, equipment, some computer equipments, some software and computer -services. You can also use it for some housing and board fees.
Can 529 accounts only be used to pay for college?
529’s can also pay for trade and vocational schools, 2 and 4 year colleges, as well as graduate school, law school and medical schools.
** Up to $10,000 is deductible annually from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. May be subject to recapture in certain circumstances such as rollovers to another state’s 529 plan or nonqualified withdrawals.
How much can I invest?
529 account contribution limits are generally high—from $200,000 to $300,000 or more, depending on the state. For the Direct Plan, you can contribute up to $375,000 on behalf of one beneficiary. This amount includes all New York-sponsored 529 savings accounts held for the same beneficiary.
Beneficiaries can attend college in any state, not just the state sponsoring the #529 plan.
There are no income restrictions to open a #529 account.
The account owner—not the beneficiary—is always in control of the account, even when the beneficiary becomes an adult.
There is no age limit for beneficiaries of a 529 on a 529 plan.
A beneficiary can have more than one account. For example, parents can open an account for a child and grandparents can open an account for the same child.
The 529 plan offers tax deductions, tax-deferred growth, and tax-free withdrawals. You can either contribute every year or set up monthly contributions that go straight into your account. And if you want, you can transfer from one 529 fund to another 529 fund to a close relative. Example, if your son finishes college and you transfer what’s left over in his 529 to his little sister’s account.
So if you have a child or even just had a baby, consider opening a 529 for them!
For more information about New York’s 529 College Savings Program Direct Plan, obtain a Disclosure Booklet and Tuition Savings Agreement at www.nysaves.org or by calling 1-877-NYSAVES. This includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing.
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The FINE PRINT
Investments in the plan are subject to risk.
Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other benefits that are only available for investments in that state’s 529 plan.
The Comptroller of the State of New York and the New York State Higher Education Services Corporation are the Program Administrators and are responsible for implementing and administering the Direct Plan. Ascensus Broker Dealer Services, Inc., serves as Program Manager and, in connection with its affiliates, provides recordkeeping and administrative support services and is responsible for day-to-day operations of the Direct Plan. The Vanguard Group, Inc., serves as the Investment Manager. Vanguard Marketing Corporation markets, distributes and underwrites the Direct Plan.
No guarantee: None of the State of New York, its agencies, the Federal Deposit Insurance Corporation (FDIC), The Vanguard Group, Inc., Ascensus Broker Dealer Services, Inc., nor any of their applicable affiliates insures accounts or guarantees the principal deposited therein or any investment returns on any account or investment portfolio.
New York’s 529 College Savings Program currently includes two separate 529 plans. The Direct Plan is sold directly by the Program. You may also participate in the Advisor Plan, which is sold exclusively through financial advisors and has different investment options and higher fees and expenses as well as financial advisor compensation.