Questions & Answers
Q. Who can open a College Savings Program account?
A. New York's 529 College Savings Program Direct Plan is open to any U.S. citizen or resident alien who has a valid Social Security number or taxpayer identification number. You must have a valid residential address that is not a post office box. The person on whose behalf you're opening the account (the beneficiary) must also be a U.S. citizen or resident alien with a valid Social Security number or taxpayer identification number. There are no income restrictions or state residency requirements.
Q. What are the tax benefits of the Program?
A. New York State taxpayers can deduct up to $5,000 of contributions to their Program account ($10,000 for a married couple filing jointly) on their state income tax return each year. However, contributions are not deductible for federal income tax purposes.
(Note: To be deductible for the current tax year for New York State income tax purposes, contributions sent by mail must be postmarked by December 31.)
Contributions to the Direct Plan in a tax year are deductible from New York state income tax, subject to recapture in subsequent years in which a rollover out to another state's 529 plan is made or a non-qualified withdrawal is made.
Q. How much can I contribute to the program?
A. The minimum contribution to open an account in New York's 529 College Savings Program Direct Plan is $25. The minimum for subsequent contributions is $25 ($15 through payroll deduction).
You can contribute on behalf of a beneficiary until the total balance of all Program accounts held for the same beneficiary reaches an aggregate maximum balance which is currently $375,000. If there's more than one account owner contributing for the beneficiary, this is the total for all accounts. Once this limit is reached, you can no longer make additional contributions but you can continue to accumulate earnings.
Q. Are the funds limited to use at New York State colleges?
A. The money from your account in New York's 529 College Savings Program Direct Plan can be used to pay for qualified higher education expenses at any eligible post-secondary school in the United States and abroad. This includes most colleges, universities, graduate schools, and vocational schools.
Q. Is there an application fee for the Program?
A. There are no application, maintenance, or transaction fees. A management fee of 0.17% covers all costs of the Program.
Q. What can the money in the account be used for?
A. The Program is designed to pay for qualified higher education expenses, including tuition, fees, room and board, supplies, books, and equipment required for enrollment at eligible undergraduate, graduate or professional institutions of higher education, or at approved business, trade, technical or other occupational schools. Normally, if a school has been assigned a federal school code by the Department of Education, then it is an eligible institution under Section 529.
Q. I have more than one child. Should I establish an account for each of my children?
A. Yes. While you can only name one beneficiary for each account, you can open accounts for different beneficiaries. Each account you open requires a $25 initial investment.
Note, the same individual can be the beneficiary of multiple accounts. For example, a father, mother, grandparent, and uncle of the same child can each open separate accounts for the same beneficiary, and can also open separate accounts for another beneficiary.
Q. Do I have to be related to the designated beneficiary?
A. No. You may designate anyone, including yourself. The tax benefits are not contingent on the beneficiary being a dependent of the account owner.
Q. What if the beneficiary decides not to go to college or does not finish college?
A. You can change your beneficiary at any time to another qualified family member for his or her eligible higher-education expenses (including tuition, certain room-and-board costs, books and supplies). You can also defer withdrawals if your beneficiary attends college later. If the money isn't used for education expenses, you can withdraw the money, subject to certain taxes and penalties.
Q. If I open an account, will my child still be eligible for financial aid?
A. Monies in New York's College Savings Program are not used in the calculation of TAP eligibility or eligibility for any other New York financial aid program. Owning an account or having an account established on behalf of a student will not adversely affect the student's eligibility calculation. However, federal, institutional or other aid programs may consider the amounts when determining eligibility.
Q. I work in New York, but live in another state. Can I get the New York tax benefits as a nonresident?
A. If you are a non-Resident New York State taxpayer, then you should consult a qualified tax advisor to assess whether you should deduct contributions to the Program on your New York State returns or instead pay more taxes in New York and, if available, take an increased credit in your home state for such taxes paid to New York.
Q. What if I move out of New York State?
A. You may roll over all or part of the balance of your Program Account to a non-New York 529 Plan without incurring any federal income tax or penalty if (i) such Rollover is to an account for the Beneficiary (provided that such Rollover does not occur within 12 months from the date of a previous transfer to any qualified tuition program for the benefit of the Beneficiary) or to an account for a new Beneficiary who is a Member of the Family of the prior Beneficiary, and (ii) the Rollover is completed within 60 days of withdrawal. For New York State taxpayers, such Rollovers would be subject to New York State taxes on the earnings portions thereof, as well as the recapture of any previous New York tax deductions taken for contributions to the Account.
You may also keep the New York Program account active until you plan to withdraw funds.
Q. Who invests the money for the Program?
A. All monies in New York’s 529 College Savings Program Direct Plan are held in a trust fund. The Comptroller of the State of New York serves as trustee of the fund and oversees the investment of all assets of the Program. The Comptroller of the State of New York and the New York State Higher Education Services Corporation together are the Program Administrators and are responsible for implementing the Program and establishing rules to govern the Program. Currently, the Program is managed by Upromise Investments Inc., with investment management and account services provided by Vanguard.
Q. What types of investments are available?
A. New York's 529 College Savings Program Direct Plan offers 16 investment choices—three age-based options that automatically adjust your assets over time to more conservative allocations and 13 individual portfolios that you adjust yourself according to your own investment strategy and risk tolerance. You can select up to five investment options per account.
Q. How will I be kept up to date on my account?
A. Quarterly statements will reflect any activity in your account and your current account balance. You can also access account information through your secured account view at the Plan’s website (www.nysaves.org) or by dialing 1-877-NYSAVES (1-877-697-2837).
Q. How can I get started?
A. Information about the Program is easily accessible online at www.nysaves.org or by calling toll free 1-877-NYSAVES.
New York's 529 College Savings Program Direct Plan is described in the current applicable Program Brochure and Tuition Savings Agreement. Accounts are opened by completing an Enrollment Form.
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. Upromise Investments, Inc. and Upromise Investment Advisors, LLC serve as Program Manager and Recordkeeping and Servicing Agent, respectively, and are responsible for day-to-day operations, including effecting transactions. The Vanguard Group, Inc. serves as the Investment Manager. Vanguard Marketing Corporation markets, distributes, and underwrites the Direct Plan.
Before you invest, consider whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.
For more information about New York’s 529 College Savings Program Direct Plan, obtain a Direct Plan Disclosure Booklet and Tuition Savings Agreement at www.nysaves.org or by calling 1-877-697-2837. This includes investment objectives, risks, charges, expenses, and other information. You should read nd consider them carefully before investing.
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. Upromise Investments, Inc., and Upromise Investment Advisors, LLC, serve as Program Manager and Recordkeeping and Servicing Agent, respectively, and are responsible for day-to-day operations, including effecting transactions. 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., Upromise Investments, 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.
Upromise, Ugift, and the Upromise logo are registered service marks of Upromise, Inc.