Participating in a 529 plan gives parents and guardians the opportunity to contribute funds toward their child or guardian’s college education without having to pay taxes on a certain portion of their income. While 529 plans are offered across the U.S., specific programs vary from one state to the next.
The state of New York’s program is known as NY’s 529. Here are seven facts about the plan:
1. According to Savingforcollege.com, in 2012 NY’s 529 plan was transitioned from a college savings program to an advisor-guided college savings plan. The change in status resulted in a number of moves within participating partners. Ascensus Broker Dealer Services is the program manager, and J.P. Morgan Investment Management Group is the investment manager.
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2. New York residents taking part in the NY’s 529 plan can use the funds toward most colleges, universities, and technical schools. The higher education facilities do not have to be New York-based. Some participating institutions are even outside the U.S.
3. As stated on NYC’s 529 official website, New York taxpayers can deduct up to $5,000 in earnings annually to take part in the program. A married couple filing jointly can deduct up to $10,000 annually.
4. There are stringent requirements that need to be followed to deposit and withdraw funds for an account associated with the NYC’s 529 plan. In some instances, a process known as recapturing could occur if a program participant winds up rolling over funds to another state’s plan, or if nonqualified withdrawals have been discovered.
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5. To open an account, a participant needs to place a minimum of $25. In most instances, future contributions also need to be $25, though they can be as low as $15 for payroll deductions.
6. New York’s 529 plan has a ceiling on a beneficiary’s account balance. The total amount cannot exceed $375,000. If a beneficiary has more than one account affiliated with the plan, the combined total cannot exceed this amount.
7. In the state of New York, 529 plan participants can generally rollover funds from one state plan to the next, and not face any federal tax consequences. However, there could be state-imposed penalties. It is best to fully understand the process before making any transition.
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