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August 11, 2009

 

New York Reduces Expenses for NY's 529 Direct Plan

College Savers Benefit from Decreased Costs as of This Month

The New York State Comptroller’s Office announced today that families saving in New York’s 529 College Savings Program Direct Plan have received a reduction in the Direct Plan's total annual asset-based fee. The fee has dropped from 0.55% to 0.49%, representing a reduction of nearly 11%. The lower expense is effective as of August 1, 2009.

“As budgets continue to tighten, we find it important to give New York families low-cost, easy-to-use programs that will help them save for college,” said State Comptroller Thomas P. DiNapoli. “Our goal is to make college more accessible to New Yorkers, and we hope that this fee reduction encourages families to continue to prioritize saving.”

New York's 529 College Savings Program Direct Plan currently has 510,000 accounts and over $6.5 billion in assets. The Direct Plan is designed to provide a number of benefits for families saving for college, including federal income tax advantages, such as the ability to grow assets deferred from federal and New York State income tax and to make tax-free qualified withdrawals.* There is also a special tax deduction for contributions made by New York taxpayers who are account owners: Up to $10,000 is deductible from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. ** The Direct Plan also allows families to open accounts with as little as $25, making it an affordable savings vehicle for families at all income levels.

“New York continues its tradition of making it easier for families looking for a low-cost, high-value way to invest for college,” said Mark Chapleau, President of Upromise Investments, program manager of New York's 529 College Savings Program Direct Plan. “This fee reduction will help open more doors for Direct Plan account holders.”

Despite the challenges of today's market environment, the State of New York, in partnership with program manager Upromise Investments and investment manager Vanguard, remains committed to delivering value to Direct Plan participants.

“Our goal is to make it easier for families with children of all ages to start saving more,” said Alba Martinez, head of Vanguard's Education Markets Group.“This fee reduction, coupled with the Direct Plan’s high-quality investment choices, including popular age-based investment options, gives families a flexible plan that can meet their needs in saving for higher education.”

Earnings on non-qualified 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, and certain withdrawals are subject to federal, state and local taxes.

** Contributions may be subject to recapture in certain circumstances – rollovers to another state's 529 plan or non-qualified withdrawals.

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.

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 Program Brochure 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.


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