Your Guide to Smarter Education and Savings
529: A flexible way to save.
A 529 plan is a simple and flexible way to save for education expenses while taking advantage of potential tax benefits. Learn how a 529 account can help cover qualified expenses, and how it can be used for a wide range of education options.
What you need to know about a 529.
A 529 plan is a state-sponsored account that helps families save for future education costs. Named after Section 529 of the Internal Revenue Code, it offers flexibility and potential tax benefits for qualified expenses like tuition, books, supplies, and room and board. Plus, it covers education options like college, graduate school, technical and trade schools, and registered apprenticeship programs.
Who can open a 529 plan?
Almost anyone—parents, grandparents, relatives, or friends—can open a 529 savings account for a beneficiary. The account owner controls how the funds are invested and used, offering peace of mind and flexibility.
Who’s the beneficiary?
The beneficiary is the person who will use the savings for education—whether that’s your child, grandchild, friend, or even yourself. The only requirement is that the beneficiary be a U.S. citizen or resident alien with a valid SSN or ITIN.
If plans change, you have options:
Stay invested:
There’s no age limit on using the money, so you can wait in case the beneficiary decides to go to school later.
Change the beneficiary:
You can transfer the funds to an eligible family member without penalty.
You may be able to roll over funds:
Transfer the remaining balance to a Roth IRA for the beneficiary, subject to specific conditions outlined in the Disclosure Booklet and Tuition Savings Agreement.
You can withdraw for other uses:
If you use the funds for nonqualified expenses, you may face a 10% penalty tax on earnings, plus federal and state income taxes.
How can the funds be used?
Your NY 529 Direct Plan offers flexibility in how you use your savings. The most powerful use of the account is to cover qualified education expenses at eligible institutions, though it can be used for many purposes as shown below.3 Have questions? Visit our FAQs page
College Tuition
Use your savings at over 6,000 eligible 2- and 4-year colleges.
Education Essentials
Cover qualified costs like tuition, fees, books, supplies, computer equipment, internet access, and more.
Room and Board
Pay for certain housing expenses during the academic term.
Other Higher Education
Funds can also be used for postgraduate programs, technical and trade schools, and registered apprenticeship programs.
Student Loan Repayment
Use funds to make principal or interest payments on federally qualified education loans.
Roth IRA Rollover
If the beneficiary doesn't end up needing the funds for higher education, up to $35k may be rolled into a Roth IRA for the benefit of the beneficiary.1
Unlock potential tax benefits with NY 529.
The NY 529 Direct Plan offers potential tax benefits—like tax-deferred growth and possible state deductions—that make saving simpler and more flexible.3
Have questions about taxes? Visit our FAQs page
Tax-Deferred Growth
Any growth of your contribution is tax-deferred at the federal and state level, which may help your savings grow over time.3
State Income Tax Deduction
New York taxpayers can deduct up to $5,000 annually—or $10,000 if married filing jointly.2
Tax-Free Withdrawals
Use savings for qualified education expenses without paying federal or New York State income taxes.3
Federal Gift Tax Incentive
Contribute up to $19,000 per year ($38,000 if filing jointly) or a single $95,000 contribution ($190,000 if filing jointly) as if it were made over a five-year period, without federal gift taxes.4
Why saving early matters.
If you saved $100 a month, this is the difference compounding could make.
The sooner you begin, the more time you have to allow your savings to potentially grow by taking advantage of compounding interest in a tax-deferred account such as an NY 529 Direct Plan.
These hypothetical examples don't represent the performance of any particular investment. The assumed 5% rate of return is for illustrative purposes only. Actual market returns will fluctuate annually and aren't guaranteed. The ending balance doesn't take into account any taxes or penalties that may be due upon distribution.3
Prepare for rising higher education costs.
Source: Vanguard's College Cost Projector5
The average cost of higher education could increase significantly by the time your beneficiary is ready for college. By starting your savings now, you give your money more time to potentially grow and offset future costs.
In this hypothetical example the average cost of one year of college includes tuition, fees, and room and board. The example also assumes an average college-cost inflation rate of 5%.5
The value of higher education in the job market.
College costs may be rising, but a degree can still offer a significant return on investment.
Source: Education pays, 2024. U.S. Bureau of Labor Statistics, Current Population Survey6
Higher education often leads to better job opportunities and higher earning potential. In fact, data consistently shows that workers with a college degree tend to earn more on average than to those without one.
The data in this graph represents the average annual earnings of workers by education level. These hypothetical examples include only persons who were 25 years of age or older and the earnings are for full-time wage and salary workers.6
This data has been annualized based on median usual weekly earnings for a 52-week year.6
Learn from the pros: NY 529 Webinars.
Join a webinar to see how an NY 529 account can support your education savings goals.
Save Your SpotInsights and information to guide your journey.
View All
Gifts to an NY 529 won’t lose their shine.
If you’re lucky enough to have family members who tend to write checks or send gift cards on holidays and special occasions, you may want to talk to them about how they can have an even bigger impact on your child’s future.
NY 529 Direct Plan can make saving for college easier - even when money is tight.
When the market is going up and down, and you’re wondering what that means for your budget, it is tempting to put off saving for college. Of course you want the best for your children, but it’s hard to save for future plans when current needs are so pressing.
What college really costs–and how much should you save?
There’s no getting around it. College is expensive. It may, however, cost less than you think.
Have questions? We’re here to help.
Whether you’re just getting started or need guidance on your existing plan, our education savings specialists are ready to help. Reach out by phone, email, or mail—we’re here to make saving simpler.
Email Us:
For New York employers:
Find out more about what NY’s 529 Direct Plan can offer you and your employees. Call us at 800-420-8580 on business days between 8 a.m. and 8 p.m. Eastern time.
Email us: employer@nysaves.org
Event request: Complete the Event Request Form
Please note, we are unable to provide account-specific information or process monetary or clerical transactions via email. For assistance with these items, please log in to your account or call 877-NYSAVES (877-697-2837). For your protection, please do not include your account number or any personally identifiable information in your email, as this is not a secure channel. You may review other ways to safeguard your own information by clicking the Security link at the bottom of this page.
1 Certain restrictions apply. Rollover must be to a Roth IRA maintained for the benefit of the Beneficiary. Rollovers can only be made from accounts open for at least 15 years and cannot include contributions or earnings on those contributions made within the last 5 years. The annual rollover limit is subject to IRA annual contribution limits with a lifetime rollover limit of $35,000. Additional restrictions may apply under federal Roth IRA rules and guidance. Consult your tax advisor prior to initiating a rollover.
2 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, nonqualified withdrawals, withdrawals used to pay elementary or secondary school tuition 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. The New York State Department of Taxation and Finance has not yet determined whether withdrawals to pay expanded K-12 expenses and Credentialing Expenses would be New York Qualified Withdrawals or New York Nonqualified Withdrawals.
3 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. Please consult your tax advisor about your particular situation.
4 In the event the donor does not survive the 5-year period, a pro-rated amount will revert back to the donor's taxable estate.
5 Source: Vanguard's College Cost Projector
6 Source: "Education pays, 2024" U.S. Bureau of Labor Statistics, Current Population Survey.