You can save on taxes while you save for college with New York's 529 Direct Plan. Listed are the tax benefits you can enjoy:
|Federal income tax benefits||
|State income tax benefit||
|Gift tax incentive||
Consider the following before you open an account:
- Your own state's plan may have additional tax benefits. If you're a resident or taxpayer of a state other than New York, you should consider whether that state offers a 529 plan with tax advantages or other benefits that aren't available through the Direct Plan. Be sure to weigh all the pros and cons of a particular plan before you choose it.
- There's no federal income tax deduction. Contributions to any 529 college savings plan aren't deductible for federal income tax purposes.
- IMPORTANT: There's a rollover penalty. A rollover of assets from your Direct Plan account to a qualified education savings program in another state is subject to New York State income tax on earnings, as well as the "recapture" of all previous New York State tax deductions made during the life of the account.
- Investment returns are not guaranteed and you could lose money by investing in the plan.
For more details about the tax benefits of the Program, read the Disclosure Booklet and Tuition Savings Agreement (PDF).
* Earnings on 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 and certain withdrawals are subject to federal, state, and local taxes.
** Up to $10,000 is deductible from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. May be subject to recapture in certain circumstances such as rollovers to another state's plan or nonqualified withdrawals.
*** In the event the donor does not survive the 5-year period, a pro-rated amount will revert back to donor's taxable estate.