The New York 529 College Plan
The 529 New York college savings plan is a tax advantaged savings plan that encourages families to save for their kids future higher educational expenses. The amount invested, when withdrawn is exempted from federal and sometimes state income tax. The amount can be used to pay tuition, accommodation, stationeries and supplies, books and other qualified higher educational expenses. The New York 529 College Savings Program enables any U.S. citizen or a resident alien to invest in it. The applicant must have a valid social security number or a tax payer identification number. A valid residential address and not a post office box are also required. The beneficiary must also be a U.S. citizen.
The money withdrawn from the account in New York 529 College Savings Plan can be used to pay for tuition, accommodation, stationeries and supplies, books and other qualified higher educational expenses not only in a college in New York but also in other states in the U.S. and a few colleges abroad. The concerned educational institute can be a university, college, and graduate school, vocational or technical college. In The New York 529 College Savings Program, the benefactor can open an account for just $25. The subsequent monthly contribution thereafter will be just $25. The maximum amount that can be contributed per beneficiary (irrespective of the number of accounts) is $235,000. Once this amount is reached, one cannot contribute money further but can accumulate earning. The New York 529 College Savings Program offers a number of investment options which takes into consideration the needs of the family and their investment choices. The investment options are also segregated on the basis of the risk involved (conservative, moderate and aggressive). The following are the various investment options available: Age Based Options: one of the most convenient 529 college savings plan. The assets are managed according to the age of the beneficiary and the risk resistance of the benefactor. For example, when the beneficiary is young, assets will be invested in portfolios with higher concentration of stock. Later, as the beneficiary grows up, investment in bonds is given preference. Individual portfolios: The New York 529 College Savings Program offers 12 individual portfolios ranging from aggressive to conservative. The individual portfolios have a balance of stock funds, bond funds and interest accumulation options. Unlike the age based options, the asset allocation in the individual portfolios remain fixed unless instructed by the owner for any change. An account can be opened for one beneficiary. However, one can open multiple accounts for the same beneficiary. Anyone can open an account for a beneficiary-parent, grandparent, uncle, aunt. The New York 529 College Savings Program offers solution if the beneficiary does not attend college. The account can be transferred for another beneficiary in the family and the 529 college saving plan can be used for him or her. If there is no prospective candidate then the amount withdrawn is subject to state and federal income taxes. |
