You're saving for college. Great! But are you sure you're getting all the tax breaks you deserve?
Industry research shows that many investors save for college using a combination of a 529 savings plan and other investment options, like bank savings accounts, CDs, and taxable mutual funds. In fact, nearly half of investors who have a 529 plan have 40% or less of their college savings in their 529 plans.*
If this sounds like you, consider consolidating your accounts and investing only in your 529 plan to help reduce your tax burden.
You get triple advantages
You know the old adage about real estate? It's all about "location, location, location." When it comes to your college savings strategy, you could say it's all about "taxes, taxes, taxes."
Investing in the NY 529 Direct Plan provides many tax benefits including:
Tax-deferred growth. Your earnings are deferred from federal and usually state taxes.
Tax deductions. If you're a New York resident, you can deduct your NY 529 plan contributions on your state income tax return, up to the state's limit.**
Tax-free withdrawals. In most cases you won't have to pay state or federal income taxes on earnings in your NY 529 account, as long as you use the money for qualified higher-education expenses.***
When you invest in taxable accounts, you don't enjoy these tax benefits. So saving in your 529 plan can possibly give you more money for college.
Let's say, hypothetically, you saved $10,000 for your child's education, and the account grew to $15,000 by the time you withdrew the money to pay for college.
If you saved the money in taxable mutual funds, and your tax rate on investment earnings was 20%, you would have paid $1,000 in taxes. But if you saved that money in a 529 plan, you would have paid $0 in taxes.
529s aren’t just for tuition
And don't forget, you can also use your 529 account to pay for room and board, fees, books, and other expenses at a variety of eligible schools, including colleges, universities, and trade or technical schools.
We’re here to help
Considering the impact of taxes is a critical part of choosing any investment, but it's especially important to take taxes into account when saving for your child's future.
For help moving money to your NY 529 account or opening a new account, refer to the Forms page or call 877-NYSAVES (877-697-2837), on business days from 8 a.m. to 9 p.m., Eastern time.