Is the NY 529 College Savings Program Right For You?

Brought to you by Momtrends

When you’re a kid, childhood can seem like forever. You’re always waiting for the next milestone- for the next inch of freedom that you think you want. A later bedtime, a cell phone, to be able to walk to a friend’s house by yourself. It all seems so far away, but we know the reality of it is that it’s entirely too close by. Every piece of parenting advice warns us about this- before you know it they’re off to college.

Ah, college! We all swear we’re going to begin saving for college before the baby is even born. With student loan debt in this country at 1.4 trillion dollars, no one wants their child to spend the rest of their adult life paying off student loans. But sometimes, life happens. Jobs are lost, cars break down, s&^% happens. But you know what, it’s never too early or too late to save. So we spent the afternoon with our friends over at Momtrends and representatives of NY’s 529 College Savings Program to hear more about this investment account option. While my ten year old Briana chef’ed it up at the Institute for Culinary Education, myself and other moms went back to the classroom to take notes.

A 529 College Savings Plan is a type of investment account that you can use for higher-education savings. The earnings grow federally tax-deferred and qualified withdrawals are tax-free. When you sign up, you will pick investments, assign the beneficiary, and determine how that money is used. Here in New York, you can also take advantage of the state tax deduction.

Pretty much anyone can open a 529 Account- parents, grandparents, relatives, friends- as long as they are a U.S Citizen or resident alien. The account can then be used to pay for qualified higher-education expenses- which includes tuition, books, supplies, equipment, and more. It can also be used for post-secondary trade and vocational schools, 2 and 4 year colleges, and post graduate programs. It can even be transferred to a sibling if needbe.

Contribution limits are usually high- from $200,000 to $300,000 or more, depending on your state. Here in New York, up to $10,000 is deductible annually from New York Sate taxable income for married couples filing jointly, or $5000 for single taxpayers.

More facts:

• Beneficiaries can use this for college in any state- regardless of where the account was opened
• There are no income restrictions to open an account
• The funds can be used for any school that has been issued a federal school code by the Department of Education
• A Ugift feature allows friends and family to contribute to the account
• The account owner is always in control of the account- even when the beneficiary becomes an adult
• There is no age limit of the beneficiary
• Multiple accounts are allowed for the same person
• Money can be withdrawn for other purposes, but with certain penalties and taxes
• Open an account with as little as $25

As our children get older, career options and education choices constantly progress and change over time. It’s easy to understand why some parents are weary about putting money into an account for college when they aren’t sure if their child will choose that path. But it was great to learn that the 529 can be used towards trade and vocational programs- and can even be transferred to a sibling. Let’s say my oldest daughter Briana ends up getting a full ride for undergrad (From my lips to God’s ears)- she can use the money for books, supplies, etc. Or if that’s also covered  (fingers crossed), she can use it for continuing education. Or, we can simply transfer it over to her little sister Gia.

Should Briana choose to follow in her dad’s path and go into the culinary field, the 529 Savings Plan can be used for this also

I also really love that multiple accounts can exist in a child’s name- making it easy for relatives to contribute to your children’s future. The Ugift feature is also an amazing idea for things like Baptisms, Communions, graduations, and more.

How To Choose Your Investments

Let’s face it. Not everyone is a risk taker. So when it comes to choosing the right option for your 529 plan, there is something for everyone. The simplest option is to choose a conservative age-based program that chooses the best percentage of stocks verses bonds based on your child’s age. For example, an account for Briana as she turns 11 would be 75% bonds and 25% short term reserves as a conservative option. Whereas Gia would begin with a 50/50 split of stocks and bonds and gradually move up as she gets closer to college age.

Or if this is your thing- there are Individual Portfolios where you can create your own strategy. It all depends on your comfort level or expertise.

If you think the NY 529 College Savings Plan is right for you, or you want to learn more, visit www.nysaves.org. There you will find additional facts, a tool to help you learn what kind of investor you are, and information to contact a representative directly.

This is a sponsored post. As always, all opinions are our own.