Comptroller DiNapoli's Financial Commentary
Boost Your College Savings 529 Contributions by Year-End.
By State Comptroller Thomas P. DiNapoliRight now may not seem like the best time to invest money in the stock market, but depending on your individual circumstances, the flexibility of New York’s 529 college savings plan program offers some appealing investment options that could provide long-term benefits.
For those with young children, you could be looking at an investment horizon of fifteen years or more. While investing more aggressively in stocks exposes you to more risk, it also gives you an opportunity to buy more shares at a lower cost. Those who buy stocks now are in a better position to benefit from future upturns.
For those with a shorter investment horizon or for those who simply wish to avoid the risks associated with stocks, New York’s plan has 13 individual portfolios, and you can select up to five investment options per account. And, if you’re not happy with the investment options you’ve chosen, you’re allowed to make changes to your portfolio once per year.
Most importantly, contributions to the State’s 529 plan are tax-deductible for New York State residents while future withdrawals are exempt from federal income tax as long as the money is used for qualifying educational expenses. Specifically, up to $10,000 is deductible from New York State taxable income for married couples filing jointly; single residents can deduct up to $5,000 annually.
Remember, though, that you must contribute to the plan by December 31 in order to qualify for the deduction on your 2009 New York State taxes.
And starting this December 1, 2009, the maximum amount you can contribute to all program accounts held for the same beneficiary will increase from $235,000 to $375,000. For more information on this contribution amount change, please see the Supplement to the Direct Plan Program Brochure and Privacy Policy at www.nysaves.org.
As families take stock of their finances, I encourage everyone to look closely at New York’s 529 College Savings Plan. Every dime counts during this economic downturn and the benefits of the 529 program could help you save some money now, while helping you reduce your college tuition costs in the future.
For more information on the 529 Direct Plan, call 1-877-NYSAVES or visit the College Savings Program page on the OSC website to request a program brochure and tuition savings agreement. For more information on the 529 Advisor Plan, call 1-800-774-2108.