Saving for College for Twins & More with NY’s 529 plan

11.17.19

blogging, education, events, Finance, nyc, parents, planning, teach, Twins, Uncategorized

Did you ever think that planning for college should happen when your children are in high school and preparing for SAT testing?

Well, it may be in your best interest to begin thinking about college in a subtle yet prepared way as early as possible. Our family includes 3 little ones still in elementary grades, but we do have to take into consideration that we may be sending two children off to college at the same time…. as many parents of multiples or close in age have to.

We had the privilege of spending the afternoon at the Art Farm in NYC. The kiddos explored the studio, created art work and met some amazing animals & reptiles. Hey, perhaps they’ve nailed their future profession in this day?!

After sitting down with the knowledgeable team of NYSaves.Org and cross examining all of the options that even include Financial Aid I’ve learned a few tips which will set our family in the right direction.

First a little about NY’s 529 Plan; its a college savings program direct plan for saving for tuition, certain room and board fees, books as well as other higher education expenses. Parents, grandparents, aunts, uncles or even friends can save in the Direct Plan including individuals out of state. The annual asset based fees are only 0.13% of the accounts assets, no charge for maintenance fees.

The owner of the account is eligible for the New York State Income tax deduction. Annual tax deductions may vary Dependent on contributions as a couple. (noted up to $10,000)

– No minimum investment

-3 age based options : from less to more conservative investments as the future student gets closer to college age.

-13 individual portfolios that can be used to create and manage your own mix of investments.

There lots of what if’s that arise when planning far in advance for anything which is why I’m sharing 2 of the major what if’s?

1. What if my child delays going to school or does not go at all?

If your child delays school, you can keep the account open. During that time, it can still grow tax-deferred.

If your child decides to not go to college or a secondary accredited trade program and they are the original beneficiary, you can transfer the account to the child’s sibling or another eligible family member, without paying a penalty.

You can even make yourself the beneficiary if you’re an eligible family member, heck you never know if you’re ready for a career change or uplift in your own education.

Let’s not forget that there is always the option to withdraw the money from the account for other uses that are non-qualified. If this shall occur you will have to pay a 10% federal penalty, as well as state and local income taxes. NOTE: This tax would be on the earnings since you contributed after-tax dollars.

2. What if my child gets a scholarship?

As long as the equivalent amount of the scholarship is withdrawn, the money would not be subject to a penalty. However, you would owe income taxes on any earnings since you had the benefit of tax free growth.

The best ? point when considering a saving plan for college such as 529 is that if you’re paying your tuition as you go with loans you’re paying interest, compared to interest gained to help you pay for school when saving with NY’s 529 plan in advance.

You can always access additional information about New York’s 529 College Savings Program Direct Plan by calling 877-697-2837 or following the links above.