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DiNapoli Reminds New Yorkers About Advantages of Participating in State's 529 College Savings Program

New York State Comptroller Thomas P. DiNapoli has chosen May 29 (5/29) to remind New Yorkers about the benefits of the State’s tax-advantaged 529 College Savings Program. Under the Program, individual New York taxpayers can deduct up to $5,000 in contributions each year from state taxable income and married couples filing jointly may deduct up to $10,000 annually. Qualified withdrawals are exempt from both federal and state income taxes.

“College costs are increasing at nearly twice the rate of inflation,” DiNapoli said. “The best defense against these rising costs is to start saving early. With a $25 minimum to open an account, families have a low-cost way to lower their taxes and grow their college savings at the same time. Education is vital to our future and New York’s 529 Program gives us a way to better secure that future for ourselves and our loved ones.”

Since 1998, when the Program started, New Yorkers have opened more than 600,000 accounts and saved $8.3 billion for college. On May 22, Governor Paterson signed a bill into law easing restrictions on the program, allowing relatives, employers and others to contribute to State-sponsored college savings accounts. Previously, only the person who opened the account was able to make contributions. Under the new law, the tax benefits still only apply to the account owner.

“With one child already in college, I know how hard parents and students work to afford higher education,” said Governor David A. Paterson. “New Yorkers have been able to save more than $8 billion through our state's 529 Program, and this expansion will allow even more money to be set aside for college. I encourage all parents, whether your children are in diapers or already on school busses, to look at how these programs can help you save for your child's education.”

Participants in New York’s 529 Program also have the option of enrolling in the free Upromise rewards service which lets families earn additional savings through eligible purchases made at many leading grocery stores, restaurants and retailers. Families who link their Upromise rewards account to their 529 account can accelerate their savings. Reward balances of $25 or more can be automatically transferred to their 529 account quarterly.

Savings from 529 accounts may be used to pay for tuition, room and board, fees, books, supplies and other equipment required for enrollment at any eligible public or private college or university, or business, trade, technical or other occupational school, in New York or elsewhere.

Account balances will not be used in the calculation of New York State student financial aid programs. However, other financial aid programs may consider College Savings Program accounts in calculating assistance.

The Program is co-administered by the Comptroller’s Office and the Governor’s Office (through the New York State Higher Education Services Corporation) and is managed by Upromise, Inc. Investments in the Direct Plan are managed by the Vanguard Group, Inc.

New York's 529 College Savings Program Direct Plan offers 15 investment choices—three age-based options that automatically adjust assets over time as the beneficiary nears college age and 12 portfolios that are adjusted by the account owner according to their own investment strategy and risk tolerance. Direct Plan participants may select up to five investment options per account.

The Program also offers an Advisor Plan which is sold exclusively through financial advisors and offers investment options not available under the Direct Plan. Fees and expenses under the Advisor Plan are generally higher and include financial advisor compensation. Advisor Plan investments are managed by Columbia Management.

To help New Yorkers better understand the benefits of the 529 Program, Comptroller DiNapoli today launched streaming video of an interview he conducted with George Makras of Upromise, Inc.

For more information on New York’s 529 College Savings Program, please call toll-free 1-877-NYSAVES or visit www.nysaves.org.

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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. serves as the Program Manager and has overall responsibility for the day-to-day operations, including effecting transactions and, in certain circumstances, assisting Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., with marketing and distribution of the Plan. The Vanguard Group, Inc. serves as Investment Manager for the Direct Plan and, in certain circumstances, assists Upromise Investments, Inc. with other administrative services. Vanguard Marketing Corporation markets and distributes the Direct Plan.

No guarantee: None of the State of New York, its agencies, the Federal Deposit Insurance Corporation (FDIC), The Vanguard Group, nor Upromise, Inc. insures accounts or guarantees the principal deposited therein or any investment returns on any account or investment portfolio. The value of accounts will vary based on market conditions and the performance of the selected investment options and may be more or less than the amount deposited.

Tax benefits are subject to certain limitations and certain withdrawals are subject to federal, state and local taxes. Please consult a financial, tax, or other adviser to learn more about how state-based benefits (or any limitations) would apply to an individual’s specific circumstances.

 

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