Saturday, June 7, 2008

New York 529 plan changes

There have been some recent changes in New York's 529 college savings plan rules.

Governor David A. Paterson has signed a bill into law that eases restrictions to the New York College Choice Tuition Savings Program, allowing relatives, employers and others to contribute to State-sponsored college savings accounts.
Now other relatives (or friends) will be able to contribute funds into the 529 plan that I have open for my child. I'll still be the only one that can get the New York State tax credit, but this is still of benefit because I can manage the money through the 529 account, instead of having to burden other relatives with opening their own accounts if they want to help save for my child's education.

One set of grandparents live in Florida, which doesn't have a state income tax, and therefore the Florida 529 plan doesn't give them any tax incentives. They'd lose nothing by using the New York plan I set up to help save for college. If they lived in a state where they would get tax benefits, it would make more sense for them to use that state's 529 plan, unless it was a truly terrible plan.

Previously rejected funds
In the past five years, more than 20,000 checks, valued at over $57 million, were rejected from these college savings accounts because they were submitted by someone other than the account owner.
That's a big chunk of change that could have been put to good use for college.

Scholarship funds can now donate

These changes also open up opportunities for scholarships, like this neat program:
Richard Stopol, President of New York City Outward Bound, said: “All of us at New York City Outward Bound are thrilled by the passage of this bill. It will enable one of our network schools, the Washington Heights Expeditionary Learning School, to put in place an innovative Work Study/College Preparation program that we hope will eventually become a model for other schools. As part of this program, students will spend a day a week in paid internships and the money earned through those internships will be deposited into College Savings Accounts that will be set up for each student. This will help make college more accessible and affordable for the students, almost of all whom will be first-generation college students.”