Preparing for the Future with an NY 529 Plan: It’s Never Too Early to Start

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We all want the very best for our children. It’s one of the few things that is universal among parents. Despite religious, political, and cultural differences, something all parents can agree on is that we hope our children succeed in whatever path they choose for their future.

If there is one thing we can learn from the current situation in the world, it’s that the future can be unpredictable. Trips are being canceled. Weddings are being postponed. Life as we know it is almost unrecognizable at times. The importance of planning for the unexpected has never been more discernible.

When I was pregnant with my oldest daughter, I experienced a life-threatening complication that resulted in a hospitalization and an extended absence from work. So, not only did I have a substantial unexpected medical bill, I wasn’t earning my regular salary either. At that time, I realized how important it was to have a little money stashed away, because you never know when you’ll need it.

That mindset has carried over as my husband and I consider our daughters’ futures. One of the largest financial burdens we both had when we met was our student loan debt. I know a lot of couples who can say the same. A NY 529 plan is one way to ease that burden for your child(ren). Just like with retirement savings, a little bit here and there can really make a difference over time.

One of the best things about the NY 529 plan is that it’s not all or nothing. If there comes a time when you’re not able to contribute as much as you normally would due to unforeseen circumstances, you can still contribute. Even $5 or $10 a month makes a difference.

As a mom, it’s hard accepting that there are so many things I can’t control. And that’s okay, because that’s how life works. But being able to reduce the amount of student loan debt my girls will take on is one thing I CAN do. Saving a little now versus borrowing more later reduces the overall cost of their education, and might be the difference between going to their dream school versus the school they can afford (or not going at all). Unlike other accounts (like UGMA/UTMA), a 529 is not considered part of the child’s assets in financial aid calculations, so it has significantly less impact on financial aid eligibility.

As our youngest daughter’s second birthday approaches, we are being bombarded with suggestions for gift ideas from grandparents, aunts, uncles, and friends. We may not be able to have a traditional birthday party the way we hope to again this year, but friends and family still want to help us celebrate her special day. A contribution to her NY 529 plan is what I’m going to offer as an option.

It’s never too early to plan for the future and investing in education is always wise. The sooner you start, the more you’ll have when the time comes to use it. Because let’s face it, we blink and those babies become toddlers. We blink again and those toddlers are now donning a cap and gown getting ready to spread their wings. Wouldn’t it be nice to play a role in helping them follow their dreams?

The Fine Print:
Contributions of up to $10,000 are deductible annually from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. New York State tax deductions may be subject to recapture in certain circumstances such as rollovers to another state’s 529 plan, federal non-qualified withdrawals, or withdrawals used to pay elementary or secondary school tuition, registered apprenticeship program expenses, or qualified education loan repayments as described in the Disclosure Booklet and Tuition Savings Agreement. State tax benefits for non-resident New York taxpayers may vary. Please consult your tax advisor about your particular situation.
Earnings on federal 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.  Please consult your tax advisor about your particular situation.
Investment returns are not guaranteed, and you could lose money by investing in the Direct Plan.
For more information about New York’s 529 College Savings Program Direct Plan, download a Disclosure Booklet and Tuition Savings Agreement or request one by calling 877-NYSAVES (877-697-2837). This document includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing.
Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other benefits that are only available for investments in that state’s 529 plan. Other state benefits may include financial aid, scholarship funds, and protection from creditors.
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.
Ascensus Broker Dealer Services, LLC, serves as Program Manager and, in connection with its affiliates, provides recordkeeping and administrative support services and is responsible for day-to-day operations of the Direct Plan. The Vanguard Group, Inc., serves as the Investment Manager. Vanguard Marketing Corporation provides marketing and distribution services to the Direct Plan.
No guarantee: None of the State of New York, its agencies, the Federal Deposit Insurance Corporation (FDIC), The Vanguard Group, Inc., Ascensus Broker Dealer Services, LLC, 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-Guided Plan, which is sold exclusively through financial advisors and has different investment options and higher fees and expenses as well as financial advisor compensation.
©2020 New York’s 529 College Savings Program

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