529 College Savings Program

Posted by Alina on Thursday Dec 18, 2008 Under useful tips

The 529 College Savings Program is one way to save for your child’s college education. Each state has it’s own plan with various rules and benefits. One can invest in any state’s 529 program and the money can be used in any other state. If you are a New York resident and invest in the New York 529 program, the money you put in is deductible from your state income tax, up to $5,000 per parent, or $10,000 per married couple filing jointly. Withdrawals are exempt from New York State income tax when used for qualified higher-education expenses. Such expenses include tuition, fees, books, certain room- and-board expenses, and supplies at any eligible post-secondary school in the United States and abroad. If your child decides not to go to college, then the account can be transferred into another family member’s name, including the parents, to be used for higher education. If no one in the family wants to use the money for education, then it can be withdrawn, but earnings will be subject to federal income tax and an additional 10% federal income tax, as well as state and local income taxes. A 529 account can be opened with as little as $25, and can reach an aggregate maximum balance of $235,000.

For more information, check out the official site here.

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