DiNapoli: Contribute to 529 College Savings Account by Dec. 31 for Tax Benefits
Lower Program Fees, Higher Maximum Balance
New York State Comptroller Thomas P. DiNapoli today issued a reminder to New Yorkers that not only are contributions to New York's 529 College Savings Program accounts tax deductible* but now lower fees, higher maximum balances and the elimination of the $25 minimum contribution fees make it easier to save for continuing higher education.
New York's 529 College Savings Program is an investment tool designed to help parents save for college. Contributions made by Dec. 31 can provide up to $10,000 in state tax deductions on 2017 income tax filings. New Yorkers can open an account and if they already have one can contribute and deduct up to $5,000 from their New York State taxable income. Married couples filing jointly can deduct up to $10,000 each year.*
"Now's the time to take advantage of the improvements we're making to New York's 529 College Savings Program and give the gift of savings for higher education this holiday season," DiNapoli said. "We're making it easier for New Yorkers of all income levels to invest in their loved one's future, as the cost of obtaining a college education continues to rise."
Six new investment portfolios have been added to the Direct Plan's three age-based options. This will smooth the transition steps from more aggressive to more conservative investments as the beneficiary nears college age.
In addition to the new investment options, program fees were reduced in September. The total asset-based fee for all Direct Plan portfolios dropped to 0.15 percent, meaning participants will pay $1.50 in program fees each year for every $1,000 invested in the plan. The maximum account balance was increased from $375,000 to $520,000 for both the Direct and Advisor-Guided Plans to more accurately reflect rising college costs. The minimum contribution of $25 has been eliminated for Direct Plan participants so individuals of all incomes can open accounts and contribute as much as they can afford.
New York's 529 College Savings Program currently includes two separate 529 plans: the Direct Plan, sold directly by the program, and the Advisor-Guided Plan, sold exclusively through financial advisors. The Advisor-Guided Plan has different investment options and higher fees and expenses as well as financial advisor compensation.
Launched in in 1997, New York's 529 College Savings Program is overseen by the State Comptroller in partnership with the New York State Higher Education Services Corp. Parents, grandparents and others can use the program to save money to help cover qualified higher educational costs including tuition, certain room-and-board expenses, books and supplies.
There are more than 790,000 Direct Plan accounts valued at $22.6 billion. Since Jan. 1, 2017 New York's 529 Program has paid out more than $1.2 billion for college-related expenses to Direct Plan account holders.
The Advisor-Guided Plan offers age-based and asset allocation portfolios. This plan also gives account holders the ability to select individual portfolios by assembling a customized asset mix, using 15 individual investment options. There are over 198,000 Advisor-Guided accounts valued at $4.92 billion. New York's 529 Program has paid out more than $233 million for college-related expenses to New York Advisor-Guided Plan account holders this year.
For information about New York State's 529 College Savings Program, visit: https://www.nysaves.org/nytpl/literatureforms/getPDFForm.do?cmsPDF=DisclosureBooklet.pdf.
No guarantee: None of the State of New York, its agencies, the Federal Deposit Insurance Corporation (FDIC), The Vanguard Group, Inc., J.P. Morgan Investment Management Inc., JPMorgan Distribution Services, 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.
*May be subject to recapture in certain circumstances such as rollovers to another state's 529 plan or nonqualified withdrawals.
For access to state and local government spending, public authority financial data and information on 140,000 state contracts, visit Open Book New York. The easy-to-use website was created to promote transparency in government and provide taxpayers with better access to financial data.