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May 27, 2011


DiNapoli Reminds New Yorkers to Participate in State's 529 College Savings Program on May 29

New York State Comptroller Thomas P. DiNapoli is reminding New Yorkers that May 29 (5/29) is 529 College Savings Day,and a 529 college savings plan is an efficient and economical way to prepare for the ever-increasing expenses of college. Under the program, individual New York taxpayers can annually deduct up to $5,000 and married couples filing jointly may deduct up to $10,000 in contributions each year from state taxable income. Qualified withdrawals are exempt from both federal and state income taxes.

“Every parent, friend or relative of a college-bound student in New York State should be aware of the benefits of a 529 college savings plan,” said DiNapoli. “The best defense against the rising college costs is to start saving early. Education is vital to our future and New York’s 529 program is a great to secure that future for your loved ones.”
Every 529 plan has been specifically designed as a financial vehicle to help constituents save for college. In most cases, the account owner can choose from a range of investment options, selecting the one that most closely fits their investment strategy and risk tolerance. Account owners can move their money from one investment option to another once each calendar year. There are age-based options that are typically invested in more aggressive securities such as stocks when the child is younger, but then automatically shift their investment allocation to become more conservative as the child nears college age.

Unlike other types of investment vehicles, money invested in a 529 plan grows tax-deferred and, provided the money is used for eligible college expenses –- tuition, certain room and board, books – distributions, including earnings, can be made tax-free.1 If the money is withdrawn and used for non-qualified educational expenses, the earnings are taxed federally as ordinary income, usually incur a 10% federal penalty tax, and may also be subject to state and local taxes.

Most plans offer an automatic investment feature which allows account owners to arrange for a predetermined contribution into the account every month, usually as little as $25.2 Often, employers will allow employees to have their 529 plan contribution directly deducted from their paychecks and invested in their 529 plan accounts.

To help New Yorkers better understand the benefits of the 529 Program, Comptroller DiNapoli launched a 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

  1. Earnings on 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, and certain withdrawals are subject to federal, state, and local taxes.
  2. A plan of regular investment cannot assure a profit or protect against a loss in a declining market.
    For more information about New York’s 529 College Savings Program Direct Plan, obtain a Program Brochure and Tuition Savings Agreement at or by calling 1-877-697-2837. This includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing.
  3. 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.
  4. 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, 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.


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