Federal Tax Reform Update

Updated information on the Federal Tax Cuts and Jobs Act of 2017

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On December 22, 2017, new federal tax reform legislation (H.R. 1) was signed into law. This legislation includes new provisions that allow 529 Plan account owners to withdraw assets to pay for K-12 tuition up to $10,000 per year per beneficiary, and to roll over 529 Plan assets into ABLE Plan accounts, subject to the annual contribution limit, beginning in 2018. These withdrawals will have no federal tax impact.

The New York State Department of Taxation and Finance issued a Preliminary Report to the Governor on H.R.1, indicating that K-12 distributions may not be considered qualified distributions under New York statutes and may require recapture of any New York State tax benefits that accrued on contributions. NY 529 account owners in other states should seek guidance from the state in which they pay taxes.

We are continuing to evaluate this new legislation and its tax impact in New York, and we encourage account owners to consult a qualified tax advisor about their personal situation. If you have questions about the NY 529 Direct Plan, you can reach our education savings specialists by phone at 877-NYSAVES (877-697-2837) Monday through Friday from 8 a.m. to 9 p.m., Eastern Time.