HOW I AM SAVING FOR MY DAUGHTER’S EDUCATION WITH THE NY 529 DIRECT PLAN

Thank you NY 529 for sponsoring this post. It’s never too early to get growing! Learn more about opening an NY 529 Plan for your child today.

When my daughter was born, I was excited to be a mom for the very first time. There is something so powerful about being a parent that you feel this unconditional love for your child and you want to do everything in your power to provide your child with the best life.

With my daughter, time just started to fly so fast and just like any other parent, I too was worried about my daughter’s future education, and mostly how I was going to afford it. Both me, as well as my husband, are graduate students and we both wanted to make sure that we are able to provide the best education for our daughter.

At that moment, I started to look for ways on how I could save little by little and put it somewhere where the money would keep growing for years to come so that we would have a lump sum amount ready when it's time for my daughter to study ahead. That is when a few of my mom's friends introduced me to the NY’s 529 College Savings Program Direct Plan.

It was very easy to open an NY 529 college savings plan account and contribute to it, and it is such a great feeling to watch that money grow in our account, relieving us of the stress of planning our child’s future education funds.

If you are a parent, worried about how to get started on saving for your child’s future education, then keep reading to find out everything there is to know about starting an NY 529 college savings account for your child.

What is the NY 529 College Savings Plan?

Let’s start from the very beginning to understand all the benefits of the NY 529 plan. A 529 plan is an investment account that you can use for higher-education expenses. You benefit from tax-deferred earnings as well as tax-free withdrawals on qualified expenses when you are ready to spend the money. Plus, as a New York state taxpayer, I also benefit from the state tax deductions*.

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How do I open an NY 529 College Savings Account?

Opening an online NY 529 account for my daughter was so easy and took me only a few minutes. When opening the account, you will need you and your child’s basic information, like birth dates, address, social security numbers or tax identification numbers, and your bank account details if you are making the initial contribution electronically. Once you have the Plan, then you need to select the investment options at the time of the enrollment. If you don’t know what to choose there is information online to help guide you through.

Who is eligible to open an account in the NY 529 Plan?

The best part about the NY 529 plan is that anyone can open an account for their beneficiary. A parent, grandparent, friends, relative, etc. Also, another great feature of this plan is that you can invite your friends and relatives to contribute to the account using a special Ugift® code by email. A great way to use the money towards something meaningful!

How much does it cost to open an NY 529 College Savings Account?

There are no fees to open an account in New York's 529 College Savings Program Direct Plan, and there is no minimum contribution amount to get started. Once you have an account, you'll pay only $1.30 in fees per year for every $1,000 you invest in the Direct Plan (0.13% total annual asset-based fee).

How much can I contribute to the plan?

The NY 529 Direct Plan maximum contribution per child is $520,000. That can easily help you pay for your child's two years or four year college education at good schools.

What are the benefits of the NY 529 plan?

NY 529 always gives the power to the account owner to decide how to use the funds, even if the child becomes an adult.
Also, the easy ways of contributing to the plan make it a pleasurable experience. You can contribute to the plan at any time and/or set-up reoccurring contributions.

What can I use the NY 529 funds for?

The NY 529 accounts are specifically designed to be only used for future educational expenses. That includes two or four-year college, postgraduate programs, or postsecondary trade and vocational schools.

Qualified expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance, the purchase of certain computer equipment, software, internet access, and other related services.

What happens to the funds if the child does not want to further their education?

After saving for so many years, if your child decides to go another route, the good news is that the money does not go to waste. There are a couple of options to choose from in that scenario.

You can keep investing in the plan for future, just in case if your child changes his/her mind
The NY 529 can be easily transferred to his/her sibling or any other eligible family member
You can use the funds to pay for your higher education

I hope this post was helpful to you in getting a clearer picture of what a 529 plan is and how you can benefit from it for your child.

To make sure that your child’s dreams come true, it is important to stay on the course and start by planning early, even if it means setting aside $5 to $10 a week to invest in your 529 plan. Even a small contribution that you make today, can grow into something big in the future. So start planning today!

Have you used an NY 529 college savings plan for your child’s education?

* 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, federal nonqualified withdrawals, or withdrawals used to pay elementary or secondary school tuition, registered apprenticeship program expenses, or qualified education loan repayments 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.

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.

Investment returns are not guaranteed, and you could lose money by investing in the Direct Plan.

For more information about New York's 529 College Savings Program Direct Plan, download a Disclosure Booklet and Tuition Savings Agreement or request one by calling 877-NYSAVES (877-697-2837). This document includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing.

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. Other state benefits may include financial aid, scholarship funds, and protection from creditors.

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, LLC, 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 provides marketing and distribution services to 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, LLC, 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-Guided Plan, which is sold exclusively through financial advisors and has different investment options and higher fees and expenses as well as financial advisor compensation.