This is a sponsored post.
This past weekend I attended Craft & Create with NY’s 529 College Savings Plan in NYC. What’s the 529 College Savings Plan you might be asking? A 529 college savings plan (typically sponsored by states) is a type of investment account your children (or relatives) can use for higher-education savings. These savings accounts are worth considering because they provide a tax savings and the earnings grow federally tax-deferred (that means tax free) not to mention qualified withdrawals (like college) are tax-free. Some states (like New York) have other tax benefits as well.* With college tuition skyrocketing it makes sense to give our children a leg up so they can go to college with some peace of mind instead of being racked with debt.
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Other Import Details About NY’s 529 College Savings Plan
Who Can Contribute to the plan?
Anyone! Even Grandma and Grandpa. Contributions to a 529 plan make great gifts for birthdays, holidays, etc. instead of a traditional toy the child will probably not remember when they are an adult. But the gift of less debt is something they will always be grateful for. You can invite friends and family to contribute to the account by sharing a special Ugift code on Twitter or by email. Ugift also provides printable gift coupons that you can distribute in person or by mail. Learn more here: www.ugift529.com.
Who Can Open a 529 Plan Account?
Just about anybody. Parents, grandparents, other relatives, Godparents and even friends can open a plan, so long as they are a U.S. citizen or a resident alien.
As an account owner, you’ll pick investments, assign a beneficiary, and determine how the money is used. If you’re a New York State taxpayer, you can also benefit from the state tax deduction.*
How Can The Money In A 529 Account Be Used?
It can be used to pay for anything that’s considered a qualified higher-education expense, including tuition; books; supplies; equipment; expenses for the purchase of certain computer equipment, software and computer-related services; and certain room and board fees.
Can 529 Accounts Only Be Used To Pay For College?
Not at all. A 529 account can be used to pay for post-secondary trade and vocational schools and postgraduate programs too.
How Much Can Be Invested In A 529 Account?
Contribution limits are fairly high so you can invest $5-$200K-$300K 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.
Earnings on non-qualified 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 and certain withdrawals are subject to federal, state and local taxes.
*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 non-qualified withdrawals.
Other Important Facts
• 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.
• 529 funds can be transferred to a close relative of the beneficiary if he or she doesn’t need the money.
Want to learn more? Here are some Useful Links:
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 record keeping 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.
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.
Disclaimer: Compensation was provided by NY 529 Direct via Momtrends. The opinions expressed herein are those of the author and are not indicative of the opinions of NY 529 Direct or Momtrends. Investments in the plan are subject to risk.
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