NY 529 Plan – More Than Just College Planning

One question you’ll get a lot when you have kids is, “How are you saving for college?” That’s a tough one to answer. I was always under the impression that at the rate of increasing tuition costs, it would be virtually impossible to make a dent into what it would cost to send my THREE children to college. Over the years, you hear bits and pieces about how families are managing, whether or not they are saving and what issues come up when going through the process. With my belief that I’d never be able to save enough money to send all THREE children to college, I resolved to just NOT.

Reinforcing my beliefs, I distinctly remember when I was in that college application process, my parents, as typical Asian frugal penny-pinching savers, learned that although we were not rich, we were considered middle class. That classification meant that I would not qualify for financial aid or any scholarships. Whatever school I was to attend, needed to be one that my parents could afford to pay outright in cash.

When the NY 529 plans rolled out years ago, I thought they were a savings plan, built under the assuming rising tuition costs, in hopes to encourage more in-state attendance by promising locked in tuition costs. I might have been wrong, or perhaps NY 529 plans have evolved since then, but it’s definitely a whole lot more now.

For years, whenever “that” question was asked, I always nonchalantly said my kids would be taking out their own student loans and paying them back just as I had been am doing. I just couldn’t fathom how we would be able to save enough money or divvy what little money we could save to each child, and have it be significant enough to help them with their college tuition costs. As much as any parents wishes to be able to send their children to the best schools, I just assumed my children would fall to the same fate I did where the only option was the school that I could afford to pay outright in cash.

It wasn’t until our accountant (the wisest man on earth!) suggested we open NY 529 plans for each of our children right away. It turns out in 2018, NY 529 Plans could now be used towards private Pre-K to 12th Grade tuition with the same tax-free savings. This was currently a very expensive, taxed, but necessary expenditure that my family incurs because of my son’s health needs. That’s just one of the many things I didn’t know about NY 529 Plans. For this very reason, having your taxes done by a professional accountant is worth every penny.

BASIC FACTS ON NY 529 PLANS

  • an investment plan previously meant for higher education costs, they now include private Pre-K through 12th grade.
  • They are state-sponsored, and you do not have to get your own state 529 plan.
  • That said, you can also go to any school in any state regardless of which state-sponsored your plan.
  • While your contribution is not tax-free, in New York State, you can write off $5000 (or $10000 if filing jointly) on your state income tax.
  • All earnings from a NY 529 Plan is tax-deferred but tax-free (you will not pay any income taxes) when withdrawing for a qualified educational expense
  • You can contribute up to $15000 (or $30000 if filing jointly) without triggering a gift tax.
  • You can even make catch-up contributions of up to $75000 (or $150000 if filing jointly) covering the last 5 years.

It’s super easy to contribute and even have friends and family contribute through ugift529.com. There’s no need for sharing of social security numbers or bank account information. They can even print a receipt for tax deduction right from the site. So many times I’ve been asked for alternative gifts for my children, other than toys and clothing to which they both have plenty of. I’m super excited to share this information with the grandparents, aunts, and friends and let them make contributions that will really make an impact on their future.

I’m feeling so much more financially smarter after opening a NY 529 Plan for each of my kids. With all those tax savings, we can live a little more and enjoy our family time guilt-free from taking away from their college savings.

This past weekend, I sent my boys down to Washington D.C. for the Major League Baseball All-Star Weekend. We’re huge baseball fans and with 3 current players and 1 in training in our house, this was a dream come true.

As a typical frugal penny-pinching Asian, I had of course booked the hotel with points, planned to use our end-of-lease, but still lots of pre-paid miles to be driven car to transport them down to DC. I also purchased the more affordable Futures semi-decent seat game tickets ($85 compared to the hundreds thousands of dollars for the main event) that came with FREE Celebrity game and Geico FanFest tickets.

While I know they were having the time of their lives, and enjoying all the many different activities and attractions around the All-Star game, I knew that going to the Home Run Derby would be just the icing on the cake of an already amazing trip. They weren’t expecting it, knowing that tickets were very expensive (I might have mentioned it a bazillion times). This already was a once in a lifetime experience, but I couldn’t help it, with all those extra NY 529 savings in my mind, just to really make it a weekend they would never forget.

I wish I could have been there with them, but every phone call was filled with more and more excitement. They texted me picture after picture and too many videos to count, of all their adventures. I even garnered a public thank you on Facebook from my husband and a big hug and thank you from my otherwise emotionless teenager.

For more information on New York States 529 Plan and how you can live more financially free, visit: www.NYSaves.org or join the conversation on Twitter or Facebook.

Check out this handy college savings planner: http://www.archimedes.com/vanguard/csp.phtml

{ disclosure: 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.

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.

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.