A 529 lets you click, start, save.
NY 529 accounts are designed to make college savings easier. Start one online in just a few minutes, and with automatic contributions and tax-deferred growth, your account can build the momentum to reach your goal.
What’s this about tax benefits?
State tax benefits vary, so it pays to compare. New York taxpayers are eligible for a State tax deduction for contributions to their NY 529 Direct Plan account—a deduction of up to $5,000 per person, or $10,000 for a married couple filing jointly. That’s in addition to tax-deferred growth and tax-free qualified withdrawals on the state and federal level. Please consult with your tax advisor.1, 2
Who can open a 529 account?
In New York, any U.S. citizen or resident alien with a Social Security number or Individual Taxpayer Identification Number can open an account.
Who can be the beneficiary?
You can open an account for a child, grandchild, friend, or even yourself. The only rule is that the beneficiary must be a U.S. citizen or resident alien with a valid Social Security number or Individual Taxpayer Identification Number.
How can I contribute to my child’s account?
You can contribute to your child’s NY 529 account by electronic bank transfer, a contribution from your bank account, check, and payroll deduction. You can even roll over funds from another 529 plan account.
How and where can I use the money?
You can use NY 529 savings at federally accredited institutions—in or out of New York, public or private. That includes eligible 2- or 4-year colleges or universities, vocational or technical schools, or graduate schools in the United States or abroad, or for apprenticeship program expenses. Use savings for tuition, books, supplies, certain room and board expenses, computers, software, and more. IRS Publication 970 has all the specific uses.
How can friends and family contribute to my 529 savings?
With NY 529, you can receive a unique gift code for your account through Ugift®, our gifting service, and share it with people who want to contribute to your beneficiary’s account.
Friends and family can also open their own NY 529 account with your child as beneficiary. The owner maintains control of the account and can enjoy many tax advantages. Check with your tax advisor for your individual situation.1, 2
What if my beneficiary doesn’t go to college or gets a scholarship?
You can change your beneficiary at any time to another eligible family member for their qualified expenses (including tuition, certain room and board costs, books, supplies, and registered apprenticeship program expenses). You can also maintain the account for your beneficiary in case they want to pursue higher education at a later date. You may also be able to roll over unused assets to a Roth IRA maintained for the benefit of your beneficiary. Additional details may be found in the Disclosure Booklet and Tuition Savings Agreement. Finally, you can take a nonqualified withdrawal, subject to certain taxes and penalties.2, 3
What impact do 529 savings have on eligibility for federal financial aid?
Students can still apply for many kinds of financial aid. Plus, 529 savings in accounts owned by parents are considered parental assets and treated at a lower percentage rate in the need-based aid calculation. Get details here.
What fees apply?
The NY 529 Direct Plan has no annual account fees or sales commissions, and for every $1,000 you invest, you’ll pay $1.10 a year in fees (0.11% total annual asset-based fee).
What if money’s tight?
A 529 account could be a smart move that puts time to work for you. You can start small, too, since NY 529 has no minimum contributions. And, to help manage your contributions, you can put your contributions on autopilot and make automatic contributions monthly or even quarterly, making it easier to save even when you start small. The best time to start is now.
More questions? Get answers at nysaves.org.
1 Contributions of up to $10,000 are deductible annually from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. New York State tax deductions may be subject to recapture in certain circumstances such as rollovers to another state's 529 plan, nonqualified withdrawals, withdrawals used to pay elementary or secondary school tuition as described in the Disclosure Booklet and Tuition Savings Agreement. State tax benefits for non-resident New York taxpayers may vary. Please consult your tax advisor about your particular situation. The New York State Department of Taxation and Finance has not yet determined whether withdrawals to pay expanded K-12 expenses and Credentialing Expenses would be New York Qualified Withdrawals or New York Nonqualified Withdrawals.
2 Earnings on federal nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements. Please consult your tax advisor about your particular situation.
3 Certain restrictions, terms, and annual limits apply to Roth IRA rollovers. Rollover must be to a Roth IRA maintained for the benefit of the current NY 529 beneficiary. Rollovers can only be made from accounts open for at least 15 years and cannot include contributions or earnings on those contributions made within the last 5 years. The annual rollover limit is subject to IRA annual contribution limits, with a lifetime rollover limit of $35,000. Additional restrictions may apply under federal Roth IRA rules and guidance. Consult your tax advisor prior to initiating a rollover.
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