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School Planning + Thinking Forward

This post is sponsored by BabbleBoxx.com and contains information on the NY’s 529 College Savings Program Direct Plan. The content and opinions expressed in this post are my own.

My sons are now 8 and 10, and my older son entered middle school this year. College is not far off at all anymore, so we’ve been investing into their NY’s 529 College Saving Program Direct Plan for a few years now in anticipation of paying university tuitions and other college fees, as well as researching summer STEM programs in areas they love, finding prep courses for high school entrance exams, and encouraging their interests with support and fun activities.

This month we focused on back-to-school time, and thinking forward to making the 2020-2021 academic year is a great one. Between reading great books, participating in fun extracurricular activities, playing challenging and exciting STEM games, and more, we’ve been busy! My older son wants to be a dentist, and my younger, animal-loving son wants to be a veterinarian, so our house is filled with everything science: chemistry sets, a telescope, a microscope, even engineering sets to learn more about physics (because all the sciences are connected). They are curious about so many things and we love learning along with them.

The time to start looking at colleges is coming closer with each passing academic year, so we’ve been investing into their NY 529 Direct Plan whenever we can. Time flies, and we want to be ready! New York has a 529 Direct Plan with Vanguard funds, and New York residents can deduct the first $10,000 of their annual NY 529 Direct Plan savings program contribution from the New York State income taxes, offering additional tax benefits.* The markets can go up and down, but thinking forward and preparing by saving every year while your children are growing up, and ideally from the time they are born (we now wish we had, even just a little!) can take a great burden off a parent’s mind.

Even if you only have a small amount to save right now, NY 529 Direct Plan puts the power of time on your side. You can make saving for college even simpler with automatic transfers and payroll deductions, or invite grandparents and friends to make gift contributions to your child’s New York’s 529 College Savings Program account. The savings can be used at thousands of eligible universities or technical schools, anywhere around the country. If one of my children doesn’t need the savings, it can be transferred to his brother or another family member, and if they both get full scholarships, we can withdraw the funds and pay a penalty tax and federal and state taxes since it’s not being used for the intended purposes*.

Most states have state-sponsored and supervised 529 plans, designed to help parents save for higher education via investment accounts that are federal tax-advantaged. New York’s 529 Direct Plan fees are low, there is no minimum investment, and residents from outside New York can join New York’s program as well (though they will not receive NYS resident tax benefits), and you can sign up online to join.* New York’s 529 program has been run by the state for more than 20 years. Planning ahead by putting aside savings for college now may result in fewer student loans needed later on, so if you are a parent thinking forward, you can learn more by visiting NY’s 529 College Saving Program Direct Plan.

DISCLOSURES

* 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 [nysaves.org] 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.

© 2021 New York’s 529 College Savings Program Direct Plan




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