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Frequently Asked Questions
Program Features | Investment Options | Tax Benefits | Frequently Asked Questions
Questions About the Program
Questions About the Program
What is a 529 college savings program?
A 529 college savings program is a tax-advantaged savings plan that enables you to invest for
college free of federal and, sometimes, state income taxes.* You can use this investment to pay for
tuition, room and board, books, supplies, and other qualified higher education expenses.
*Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
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Who can invest in New York's 529 College Savings Program Direct Plan?
New York's 529 College Savings Program Direct Plan is open to any U.S. citizen or resident alien who has a valid Social Security number or taxpayer identification number.
You must have a valid residential address that is not a post office box.
The person on whose behalf you're opening the account (the beneficiary) must also be a U.S. citizen or resident alien with a valid Social Security number
or taxpayer identification number.
There are no income restrictions or state residency requirements.
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Does the money have to be used at a college in New York State?
No. The money from your account in New York's 529 College Savings Program Direct Plan can be used to pay for tuition, fees, books, room and board, supplies, and other qualified higher education expenses at any eligible post-secondary school in the United States and abroad. This includes most colleges, universities, graduate schools, and vocational schools.
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What is the minimum initial investment to open an account?
The minimum contribution to open an account in New York's 529 College Savings Program Direct Plan is $25.
The minimum for subsequent contributions is $25 ($15 through payroll deduction).
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How much can I contribute to my account?
You can contribute on behalf of a beneficiary until the total balance of all Program accounts held for the same beneficiary reaches an aggregate maximum balance which is currently $235,000.
If there's more than one account owner contributing for the beneficiary, this is the total for all accounts.
Once this limit is reached, you can no longer make additional contributions but you can continue to accumulate earnings.
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Are contributions tax-deductible?
New York State taxpayers can deduct up to $5,000 of contributions to their Program account ($10,000 for a married
couple filing jointly) on their state income tax return each year.
However, contributions are not deductible for federal income tax purposes.
Learn more about the tax benefits of New York's 529 College Savings Program Direct Plan.
(Note: To be deductible for the current tax year for New York State income tax purposes, contributions sent by mail must be postmarked by December 31.)
Contributions to the Direct Plan in a tax year are deductible from New York state income tax,
subject to recapture in subsequent years in which a rollover out to another state's 529 plan is made or a
withdrawal from an Account is subsequently redeposited by the Account Owner into a Program Account.
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What are my investment choices?
New York's 529 College Savings Program Direct Plan offers 15 investment choices—three age-based options that automatically adjust your assets over time to more conservative allocations
and 12 individual portfolios that you adjust yourself according to your own investment strategy and risk tolerance.
You can select up to five investment options per account.
Learn more about the Program's investment options.
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How do I find information about the performance of the portfolios?
For up-to-date information on the performance of the investment portfolios available through New York's 529 College Savings Program Direct Plan,
see the Investment Performance section of our Web site.
(You can also click "Investment Performance" on our homepage.)
To see up-to-date information on your specific Program investments, log on to our Web site.
You can view your most recent account balances, as well as online versions of your quarterly statements.
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Can I open an account for more than one beneficiary?
Yes. While you can only name one beneficiary for each account, you can open accounts for different beneficiaries.
Each account you open requires a $25 initial investment.
Note, the same individual can be the beneficiary of multiple accounts.
For example, a father, mother, grandparent, and uncle of the same child can each open separate accounts for the same beneficiary, and can also open separate accounts for another beneficiary.
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What if the beneficiary doesn't go to college?
You may leave your money in the account in the event that the beneficiary decides to attend college at a later date.
You may also name another eligible family member as beneficiary on the account and use the 529 assets to pay for that person's education.
If no eligible family members can be named beneficiary, then you may choose to close the account and earnings will be subject to federal income tax and an additional 10% federal income tax, as well as state and local income taxes.
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Can I move money from one investment option to another?
Yes. Under the federal rules governing 529 plans, you can change the way your existing assets are invested once per calendar year or whenever the account beneficiary changes. You can change how your future contributions are allocated at any time.
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Can I transfer money from another 529 plan to New York's 529 College Savings Program Direct Plan?
Yes. Generally, you can transfer your assets for the same beneficiary from an account in one state plan to an account in another state plan without federal tax consequences if the rollover does not occur within 12 months from the date of a previous transfer to any 529 plan for that beneficiary. However, there may be state income tax consequences (and in some cases state-imposed penalties) resulting from such a rollover. You can also transfer money from Education Savings Accounts, Uniform Gifts/Transfers to Minors (UGMA/UTMA) accounts, and U.S. Savings Bonds to your Program account. Documentation of principal and earnings from these investments is required.
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Can I open an account in New York's 529 College Savings Program Direct Plan with the money from my child's UGMA/UTMA account?
You may use money from a Uniform Gifts/Transfers to Minors (UGMA/UTMA) account to open an account in
New York's 529 College Savings Program Direct Plan, but keep in mind that you may incur capital gains taxes from the sale of the assets currently held in the
UGMA/UTMA account.
Since any money gifted to a child in an UGMA/UTMA account is irrevocable, the 529 should be opened as a separate "UGMA/UTMA 529" account.
You should consider opening a separate 529 account for the same
child if you wish to make additional contributions of non-UGMA/UTMA money. Any money that you contribute
to the "UGMA/UTMA 529" account will be considered owned by the child and you will not be able to change
the beneficiary of this account.
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Can I open an account in New York's 529 College Savings Program Direct Plan online?
Yes, you can open an account online and fund it by electronic bank transfer,
check or money order, payroll deduction (if available through your employer), or by a rollover from another
college savings vehicle. Once you open your account, you can manage your
account online, including making additional contributions, changing personal information, and receiving
quarterly statements and transaction confirmations online.
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How do I make withdrawals from the plan?
Qualified withdrawals can be done online, by phone, or by submitting a Withdrawal Request Form. Non-qualified withdrawal
must be requested by submitting the Withdrawal Request Form which is available for download from the website or it can be
mailed to you upon request.
Proceeds from qualified withdrawals can be sent to the account owner, to the beneficiary, or to the higher educational
institution.
Proceeds from non-qualified withdrawals can be sent to the account owner at the address of record or to the beneficiary.
A 1099Q will be generated by the Program in January of the calendar year following a year in which there was a withdrawal
from the account. The recipient of the 1099Q will be either the account owner or the beneficiary, depending upon who
received the proceeds of the withdrawal. Withdrawals sent to the account owner will be reported under the account owners
social security number. Withdrawals sent to the beneficiary or to an educational institution will be reported under the
beneficiary's social security number per IRS guidelines.
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How long does the withdrawal process take?
For withdrawals done online, or by phone, if your request is submitted on a NYSE business day prior to 4:00 pm Eastern
time, your withdrawal will be processed with that day's trade date. Withdrawals requested after the 4:00 cut off time will
receive the next business day's trade date. Proceeds can be sent by check or, if you already have banking instructions
established on your account (for security purposes this must be established 15 days prior to your withdrawal request) by
Electronic Bank Transfer to your bank account. Proceeds by check will be mailed to the recipient within three business
days.
For withdrawals done by submitting a withdrawal request form, if your form is received in good order on a business day prior
to 4:00 PM ET, it will receive that day's trade date, and a check will be mailed to the appropriate recipient within 3 business
days. Allow 10 business days for the check to be received. If the proceeds from your withdrawal are being sent directly to
the educational institution, they will be sent through New York's Higher Education Services Corporation (HESC). Allow extra
time if the proceeds are being sent directly to the educational institution, as crediting the money to the student's school
account may be delayed in periods of heavy volume.
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How soon can I begin making withdrawals after depositing?
You can withdrawal money at any time, but if the withdrawal includes uncollected assets, your withdrawal proceeds
will be held until the recent contribution has been collected. Contributions by check normally clear within 10
business days while contributions by electronic transfer usually clear within 5 business days.
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What are eligible higher education expenses?
To qualify for federally tax-free withdrawals on earnings*, the money must be used for qualified higher education
expenses of the beneficiary at an eligible educational institution. These expenses include tuition, mandatory fees,
books, supplies, and equipment (including computers) required for enrollment or attendance; room and board during any
academic period the beneficiary is enrolled at least half-time; and certain expenses for a "special needs" student.
Reference IRS Publication 970 for more detailed information on eligible expenses at
www.irs.gov/publications/p970/index.html.
*Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
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How do I know which educational institutions are eligible?
Normally, if a school has been assigned a federal school code by the Department of Education, then it is an eligible
institution under Section 529. You can search for school or campus codes by using the link on our website under
College Savings Tools.
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