Wednesday, February 15, 2017

Planning ahead for College

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 Seems like just yesterday, I was telling my Mom, this was finally it. I was going to have a baby and she would be a grandmother for the first time. I remember her holding my hand and helping me through a rough labor. Just a minute later we were picking out my son's first school backpack and his first day of school outfit. He was ready to go to school although I was a bit concerned. He tested ahead for his age and I remember thinking he was a year younger than most of his classmates. Would he fit in? 
Compensation was provided by NY 529 Direct via Momtrends.  The opinions expressed herein are those of the author and are not indicative of the opinions of NY 529 Direct or Momtrends.
A second later it seemed, my son entered second grade and already started to plan for his future. What job he wanted as a grown up. A grown up? Where have the years gone? They say as you get older they slip by you but lightening speed just pails in comparison once you start actually living them. Now, is the best time to think ahead for his future. I have always been a very savvy person when it comes to fiances. I wanted to have a nest egg, a "rainy day fund" because in these economic downfalls it is smart business to do so. I am after all not just in-charge of myself but also the little soon-to-be twenty something year old going off to college, second grader! Let's talk College savings plans specifically a 529 College Saving Plan we are setting up for our son.

 First let me start off by going over some of the frequently asked questions I get! Anytime you are putting money into something it is helpful to know exactly what you are getting into!
What is a 529 college savings plan? 
It's a type of investment account you can use for higher-education savings later on. Your earnings grow federally tax-deferred, qualified withdrawals are tax-free,* and some states (like New York) have other tax benefits as well.** These are great if you have a little one like I do and want to save ahead for their future schooling pans!
Who can open a 529 plan account? 
Just about anybody can open a 529 account—parents, grandparents, other relatives, friends—as long as he or she is a U.S. citizen or a resident alien. If you're a New York State taxpayer, you can also benefit from the state tax deduction.** My Mother ( grandmother) has one as well for my son because we all want to contribute in some form!
How can I use the money in a 529 account? 
You can use it to pay for anything that’s considered a qualified higher-education expense, including tuition; books; supplies; equipment; expenses for the purchase of certain computer equipment, software, and computer-related services; and certain room and board fees. Like, I said since my mother also has one for him we figured the money can cover most of his expenses as they come in. Depending on which plan you choose you can gear it to be more conservative or more aggressive.
How much can I invest? 
529 account contribution limits are generally high—from $200,000 to $300,000 or more, depending on the state. For the Direct Plan, you can contribute up to $375,000 on behalf of one beneficiary. This amount includes all New York-sponsored 529 savings accounts held for the same beneficiary. Since we are starting this while he is young we both put small amounts in and then add to it every pay check.
* 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. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state and local taxes. 
** Up to $10,000 is deductible annually from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. May be subject to recapture in certain circumstances such as rollovers to another state's 529 plan or non-qualified withdrawals.
The future can have so many amazing opportunities. I want to make sure my son can experience them. Experience our process through this and check in later to see how it is going! I strongly urge you to take some time and really plan ahead. I wish my parents had set up some sort of college fund because it took years for me to afford that luxury. Now we can really save, invest as he grows instead of scrambling at the last minute.  
Have you started to plan your child's college, yet?
Have some questions? Check out the NY 529 website here.
No guarantee: None of the State of New York, its agencies, the Federal Deposit Insurance Corporation (FDIC), The Vanguard Group, Inc., Ascensus Broker Dealer Services, Inc., nor any of their applicable affiliates insures accounts or guarantees the principal deposited therein or any investment returns on any account or investment portfolio.
New York’s 529 College Savings Program currently includes two separate 529 plans. The Direct Plan is sold directly by the Program. You may also participate in the Adviser Plan, which is sold exclusively through financial advisers and has different investment options and higher fees and expenses as well as financial adviser compensation.

For more information about New York’s 529 College Savings Program Direct Plan, obtain a Disclosure Booklet and Tuition Savings Agreement atwww.nysaves.org or by calling 1-877-NYSAVES. This includes investment objectives, risks, charges, expenses, and other information. You should read and consider them carefully before investing.  

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