I’m not all that proud to admit that, when it comes to finances, I'm not very knowledgeable. Savings and account types and all that bank and money mumbo-jumbo tend to go over my head. I have very little patience and even less prowess. Just try to talk to me about an IRA, and my eyes will literally roll to the back of my head. I’m a words girl—math is not my jam. Suze Orman would hate me.
Nevertheless, my husband and I have been trying to be a little smarter and more savvy with spending and saving so that we can meet some major goals— big vacations, a future dream home, and, one-day, retirement. These are important milestones for our family of four, so I’ve tried to take an invested (get it?) interest in our savings. I’m trying to pay attention to things like tax breaks, penalties, allocating funds, and where all the money actually goes. My eyes may glass over, but I’m making an effort to keep them affixed forward and focused. It's just too important.
Still, we’ve yet to do a ton in terms of saving for our children’s college educations. It just seems so far off. They’re still babies, I figured I could wait a little longer. But I recently looked up the 2016 yearly tuition for Syracuse University, where both my husband and I went to college, and it’s a staggering $65,000.. So, yeah, when it comes to saving for your child’s college education—I guess, there really is no time like the present, regardless of how far away this day may seem.
And that’s why I was so excited to join Momtrends at a blogger event at on the Intrepid (yes, the battle ship) this past weekend, to learn all about the NY 529 Direct College Savings Plan. We were given a veritable education about this incredible program. (Meanwhile, the bloggers’ children got a lesson of different sorts—touring the museum and braving the flight simulators—lucky ducks... I wanted to join them, but, NO, focus, Lauren. Focus!)
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We were given a presentation and learned what makes the NY529 different and why it’s a smart choice for college savings. I’m sharing below in easily digestible tidbits.
o A 529 college savings plan is a type of investment account that you can use for higher education savings. Most 529 plans are sponsored by states.
o Use it to pay for anything that’s considered a higher-education expense—tuition, books, supplies, equipment, and more.
o A 529 Account can be used to pay for 2 and 4 year colleges, vocational schools, and postgraduate programs.
o Your earnings grow federally tax-deferred, qualified withdrawals are tax-free, and some states—like New York—offer other tax benefits as well.
o Anyone can open a 529 account—parents, grandparents, friends, and relatives. As an account owner, you pick the investments, assign a beneficiary, and determine how money is used. If you’re a New York State taxpayer, you can also benefit from the state tax deduction.
• HOW MUCH:
o 529 account contributions are generally high—ranging from $200 to $300K—depending on the state. For the Direct Plan, you can contribute up to $375K on behalf of ONE beneficiary (or $14K per child, per year).
o Beneficiaries can attend college in any state—not just the state sponsoring the 529 plan. In fact, they can even attend some accredited institutions across the world.
Sounds pretty good, right? I also learned that, often times, traditional college savings accounts can work "against" a child. In other words, if you’ve accumulated a good amount of money in a savings account in the child’s name, he could be limited in terms of receiving financial aid. The 529, on the other hand, really doesn’t “hurt” you. Generally, the school evaluates that a student can probably use less than 6 percent of the 529 towards college expenses. In other words, he’ll be more eligible for financial aid. Win-win!
I feel so educated after the event at the Intrepid! I’m literally chomping at the bit to start putting money aside in a 529 account for each kid. I'm suddenly empowered to take charge of my children’s financial and educational futures—something I would’ve been ill-equipped to do just two days ago.... And it’s a good thing I'm ready now—Syracuse University isn’t getting’ any cheaper!
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