New Yorkers can choose to invest in almost any 529 plan, but they are eligible for state tax benefits through an income tax deduction if they use an in-state 529 plan. The state of New York administers two 529 college savings plans: New York’s 529 College Savings Program – Direct Plan and New York’s Advisor-Guided College Savings Plan.
The main difference between the state’s plans is that one is a direct-sold 529 plan, and the other is an advisor-sold 529 plan. Direct-sold 529 plans can be opened online and generally have lower fees, while advisor-sold 529 plans are available through licensed financial advisors who can offer professional guidance on college savings. New York’s direct-sold option offers lower fees and more robust historical performance than New York’s advisor-sold 529 plan.
Both plans offer the standard tax-advantaged benefits of 529 plans, which include tax-free withdrawals for qualified higher education expenses.
There is no minimum construction for New York’s 529 College Savings Program – Direct Plan, whereas there’s a $1,000 minimum contribution for New York’s Advisor-Guided College Savings Plan. New York State’s lifetime contribution limit is $520,000 per beneficiary.
How to enroll in a New York 529 plan
Families can open New York’s 529 College Savings Program – Direct Plan by clicking the ENROLL now button and completing an application online. The 529 plan account owner must provide their name, Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), date of birth, mailing address, telephone number, and email address.
A licensed financial advisor can help families enroll in New York’s Advisor-Guided College Savings Program.
New York 529 plan state income tax deduction
New York offers residents an annual state income tax deduction for contributions of up to $5,000 ($10,000 if married filing jointly) to a New York 529 plan. The state tax deduction is only available to the account owner or their spouse. If a grandparent or other individual makes a gift contribution to a parent-owned 529 plan account, they are not eligible for the deduction.
New York 529 plan fees
New York’s direct-sold 529 plan has a total asset-based expense ratio of 0.12%, one of the lowest available among 529 plans. The total asset-based expense ratio for the advisor-sold plan ranges from 0.28% to 1.99%, depending on the share class.
According to Savingforcollege.com’s most recent 529 fee study, the 10-year total asset-based fees on a $10,000 investment in New York’s direct-sold 529 plan would be $154. The 529 fee study does not include advisor-sold 529 plans.
New York 529 plan investment options
New York’s direct-sold 529 plan offers diverse investment options featuring Vanguard mutual funds. Portfolio options include:
- Age-based portfolios based on a desired level of risk (conservative, moderate, aggressive) that automatically shift to more conservative investments as the beneficiary gets closer to college
- Multi-fund portfolios with a target risk and investment objective (aggressive growth, growth, moderate growth, conservative growth, and income)
- Individual fund portfolios that invest in a single mutual fund
- An interest accumulation portfolio that is designed to protect the principal investment
Families who invest in New York’s advisor-sold 529 plan can select among investment options featuring mutual funds from JP Morgan and State Street Global Advisors (SSGA). Portfolio options include:
- Age-based portfolios that adjust allocations based on the beneficiary’s age
- Multi-fund portfolios with a target risk and investment objectives
- Individual fund portfolios from JP Morgan Chase and SSGA
New York 529 plan performance
New York’s direct-sold 529 plan ranks in the top 10 in Saving for College’s quarterly performance rankings.
Savingforcollege.com ranks the best 529 plans and assigns a 5-Cap Rating to each 529 plan based on performance, costs, features, reliability, and whether or not the plan offers any unique benefits for residents.
New York’s direct- and advisor-sold 529 plans received the following ratings for residents as of May 12, 2023:
529 Plan | Overall 5-Cap Rating |
New York’s College Savings Program – Direct Plan | 5/5 |
New York’s Advisor-Guided College Savings Plan | 4/5 |
Source: Savingforcollege.com data as of 5/12/2023
FAQs
New York's direct-sold option offers lower fees and more robust historical performance than New York's advisor-sold 529 plan. Both plans offer the standard tax-advantaged benefits of 529 plans, which include tax-free withdrawals for qualified higher education expenses.
Does it matter what state 529 plan you use? ›
529 plans are state-sponsored, but you can pick a plan from any state. Most states offer at least one 529 plan. You don't have to invest in your own state's plan, but many states offer residents a state tax deduction for doing so. (There is no federal tax deduction for 529 contributions.)
Is the NYS 529 plan good? ›
Low costs. NY's 529 Direct Plan has some of the lowest costs available for 529 plans. You pay only $1.20 in fees per year for every $1,000 you invest in the plan (0.12% total annual asset-based fee). No advisor fees, commissions or account maintenance fees, which other plans may charge.
Does NY tax out of state 529 plans? ›
A rollover of assets from your Direct Plan account to a 529 plan in another state is subject to New York State income tax on earnings, as well as the "recapture" of New York State tax deductions previously taken.
Which state has the best performing 529 plan? ›
Here are some of the best 529 plans by state as picked by Business Insider's editors in 2024.
- Bright Start Direct-Sold College Savings Program (Illinois) ...
- U. ...
- Ohio's 529 Plan, CollegeAdvantage. ...
- ScholarShare 529 (California) ...
- Pennsylvania 529 Investment Plan. ...
- my529 (Utah) ...
- New York's 529 College Savings Program. ...
- Alaska 529.
Tips for Comparing 529 Plans
- Review costs. 529 plans may have administrative fees or other investment costs, which can reduce your investment earnings. ...
- Look into tax benefits. Some state plans offer tax breaks for state residents. ...
- Understand plan types. Two types of 529 plans exist. ...
- Review online platforms.
When the child is young, investing in a low-fee 529 plan from another state may be better, even if your own state provides a state income tax break on contributions. When the child enters high school, the state income tax deductions and tax credits may be worth more than the lower fees on an out-of-state 529 plan.
Can I move my 529 plan to another state? ›
You can transfer funds in a 529 plan from one state to another through a direct rollover from the old 529 plan to the new 529 plan. You can also transfer the 529 college savings plan through a distribution-contribution combination.
Is the Vanguard 529 good? ›
The Bottom Line. Saving for educational expenses can be daunting, but 529 plans offer tax advantages and plans that maximize the time you have to save. Vanguard's 529 plans offer low expenses and decades of experience, making it a solid choice for college savings.
How much does NY State 529 cost? ›
There are no fees to open an account in New York's 529 College Savings Program Direct Plan, and there is no minimum contribution amount to get started. Once you have an account, you'll pay only $1.20 in fees per year for every $1,000 you invest in the Direct Plan (0.12% total annual asset-based fee).
There are no annual contribution limits for New York 529 plans, other than the annual gift tax exclusion and 5-year gift-tax averaging. New York 529 plans have one of the highest cumulative contribution limit of $520,000 per beneficiary.
Is there a better alternative to a 529 plan? ›
Brokerage Accounts
Compared to 529 plans, brokerage accounts offer complete flexibility in investment options. You can diversify your investments across Roth IRAs, HYSAs, mutual funds, stocks, bonds, and more through a single account.
Does it matter what state your 529 is in? ›
A 529 plan is a state-sponsored investment account where you invest savings into the investment options available in the plan, and depending on market activity, it may grow. For the most part, plans are open to residents of any state; if you live in Mississippi, you can invest in Ohio's 529 plan.
What is the 15 year rule for 529 plans? ›
In addition, you need to have owned the 529 plan for at least 15 years before you can roll over funds, and any contributions made in the last five years before distributions began (including any earnings) are not eligible to be rolled over.
Can you use 529 for private school in New York? ›
Yes. This is a withdrawal to pay expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school; or. Yes. This is a withdrawal to pay for principal or interest on a qualified education loan of the beneficiary or a sibling of the beneficiary.
How much does a 529 plan cost in NY? ›
There are no fees to open an account in New York's 529 College Savings Program Direct Plan, and there is no minimum contribution amount to get started. Once you have an account, you'll pay only $1.20 in fees per year for every $1,000 you invest in the Direct Plan (0.12% total annual asset-based fee).
What is the difference between direct sold and advisor sold 529 plans? ›
If you enroll in a direct-sold 529 savings plan, you are responsible for managing your own investments through their plan's online account portal. An advisor-sold 529 savings plan is a 529 savings plan that is sold through an investment firm.
