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These times are uncertain, and that reality is a nerve-wracking one. I might not be able to control what’s going on in the world and how others feel or behave, but I find peace knowing that I am not without control over everything else. So, I have decided to focus on what I can control:
- How we spend our money
- The energy in my home
- How I react to situations
- The time spent on my phone
That first one is very important to me because one of my bigger 2020 goals was to pay off all of our debt. That might not be possible anymore given the current state of the world; however, we now really realize the importance of planning for the future, so our finances are in line.
During stressful times, I try to stay optimistic. I am doing my best to enjoy the present moments with my kids and husband while also being hopeful about their futures. College was one of my favorite times in life, and I want them to be able to experience it, too. That’s why it is important for us to keep in perspective that their future ambitions will be long-term and not bound by what is happening right now. Staying the course and saving money in the NY’s 529 College Savings Program Direct Plan is an essential part of keeping their future education in mind.
In times of uncertainty, it is understandable that people might be nervous about investments. If that is the case, adopting a “do-what-you-can” approach for continuing to save for college is better than not saving at all. If you’re not able to contribute as much to your 529 as you did previously, that’s okay.
Give yourself a break. Any amount you can save is better than nothing, and every little bit can add up over time. Putting aside money for college now means taking out fewer, if any, loans later on. Saving rather than borrowing makes the overall college cost much lower.
Here are a few important things that might interest you to make the decision to enroll in an NY 529 Direct Plan account:
- Your child can attend any eligible higher-education institution, not just a 4-year college or university. This includes vocational and trade schools, community colleges, and graduate schools.
- Unlike other types of accounts, such as a custodial account under the Uniform Gifts/Transfers to Minors Act, a 529 plan is generally considered part of the parents’ assets, not the child’s. Therefore, it will have less impact when it comes to financial aid eligibility.
- If your child, the named beneficiary, does not want to continue their higher education you still have options:
- You can stay invested in case he or she decides to attend school later, as there’s no age limit on using the money. Or you can change the beneficiary to an eligible family member.
- You can also withdraw the money for other uses. (However, a 10% penalty tax on earnings, as well as federal and state income taxes, may apply if you withdraw the money to pay for nonqualified expenses.*)
We tell our kids they can do anything they set out to do, and I truly do believe that. I also believe lessening the financial burden of their higher education will alleviate any added stress and help them excel in whatever endeavors they choose.
* 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 nonqualified 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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