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New York's 529 College Savings Program - Direct Plan

New York

The team of Upromise Investments and The Vanguard Group took over management of this 529 savings program from TIAA-CREF in late 2003. It now features age-based and static portfolio options utilizing Vanguard mutual funds, and accounts can be linked to the Upromise Rewards Service.

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General

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Residents are not limited to investing in their own State's plan. Another state may offer a plan that performs better and has lower fees. If there is no tax break offered for in-state investors... shop around!

Also, the plan chosen does not affect which state the student enrolls in. An investor can live in NY, invest in a plan from NV and send a student to college in FL.

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Program type:

Savings

How to enroll:

Enroll directly with the program.

Initial year of operation:

1998, but substantially changed in November 2003

State agency(ies):

Office of the State Comptroller and the New York State Higher Education Services Corporation

Program manager:

Upromise Investments, Inc.

Program distributor:

The Vanguard Group, Inc.

Manager contract term:

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Eligibility

State residency requirements:

None

Who can be a participant/owner in the program?

U.S. citizens and resident aliens including minors, UGMA/UTMA custodians, and legal entities

Significant time or age restrictions imposed by the program:

None

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Contributions

Maximum contributions:

Accepts contributions until all account balances in New York's 529 plans for the same beneficiary reach $375,000.

Minimum contributions:

$25, or $15 per pay period via payroll deduction

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Investment Options

Age-based investment options:

The Age-Based Option offers a choice among three different risk levels (Aggressive, Moderate, or Conservative) each containing five portfolios of underlying mutual funds. Contributions are placed into the portfolio corresponding to the selected risk level and beneficiary’s age, and later reassigned to more conservative portfolios as the beneficiary approaches college age.

Static investment options:

Select among four multi-fund portfolios (Growth, Moderate Growth, Conservative Growth, and Income), nine individual index-fund portfolios, and the Vanguard Short-Term Reserves Account.

Underlying investments:

Vanguard mutual funds

Underlying fund allocations:

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Investment performance link:

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Portfolio Fees & Performance Lookup

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Fees & Expenses

Enrollment or application fee:

None

Account maintenance fee:

None

Program management fees:

0.25% manager fee; fee includes underlying fund expenses.

Expenses of the underlying investments:

Not applicable, included in the program management fee.

Total asset-based expense ratio:

0.25%

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Taxes and other Benefits

Program match on contributions:

None

State tax deduction or credit for contributions:

Contributions to any of New York's 529 plans of up to $5,000 per year for an individual taxpayer, and $10,000 per year for married taxpayers filing jointly, are deductible in computing New York taxable income. Only contributions made by the account owner, or if filing jointly, by the account owner's spouse, are deductible. Contribution deadline is December 31 postmark.

Value of in-state tax benefits:

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State tax recapture provisions:

The principal portion of rollovers and nonqualified withdrawals from this plan are subject to New York tax to the extent of prior New York tax deductions, but only after removal of non-deducted contributions. A rollover for this purpose does not include a trustee-to-trustee transfer between two different accounts in New York's 529 plan.

State tax treatment of qualified distributions:

New York law exempts qualified distributions from a New York 529 plan (via specific exclusion) and from non-New York 529 plans (via conformity to the federal tax exclusion).

State tax treatment of rollovers:

New York follows tax-free treatment for rollovers except that, according to a New York State Dept. of Taxation and Finance interpretation, a rollover out of a New York 529 plan is treated as a nonqualified withdrawal. A direct trustee-to-trustee rollover between two New York 529 accounts is not treated as a nonqualified withdrawal for this purpose.

Does the sponsoring state exclude the value of an account for state financial aid purposes?

Yes

Does participation in the program provide beneficiaries with any advantages in qualifying for resident tuition status at state institutions?

Does the program have a formal agreement with a rewards program or outside scholarship program?

Yes, with the Upromise rewards service

Statutory protection of an account from creditors:

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Distributions & Terminations

To whom are distributions made payable:

Choice of account owner, beneficiary, or eligible educational institution; if the institution, then the withdrawal amount is first directed to the NY Higher Education Services Corp. and then paid to the institution from HESC.

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