The COLLEGE CHOICE Savings Program
Q&A on the College Choice Savings Account
Who can open a College Savings Program account?
Any U.S. Citizen or resident alien who has a valid Social Security number or taxpayer identification number.
What are the tax benefits of the program?
New York taxpayers can receive a New York income tax deduction for contributions of up to $5,000 annually. Married couples may deduct up to $10,000 when filing jointly. The deduction also applies to New York City income tax. Qualified withdrawals are also exempt from New York and federal income tax.
How much can I contribute to the program?
Open an account with a $25 contribution, and you can make additional contributions of $25 or more by check (or automatic deduction) from a bank account. If your employer offers payroll deduction, the minimum contribution is $15 per paycheck. A beneficiary may have more than one account, but the combined maximum balance for all accounts for the same beneficiary cannot exceed $235,000.
Can the funds be used only for New York State accredited colleges?
Funds can be used at eligible schools anywhere, not just those in New York State.
Is there an application fee for the program? Are there any other program fees or costs?
There are no application, maintenance or transaction fees. A management fee of .60% covers all costs of the program. A federally mandated 10% penalty will be imposed on the earnings portion of most withdrawals used for purposes other than qualified higher education expenses.
What can the money in the account be used for?
Account withdrawals, including investment earnings on contributions, are exempt from New York income taxes if used for qualified higher education expenses. Allowable expenses include tuition, room and board, fees, supplies, books and equipment required for attendance at eligible undergraduate, graduate or professional institutions of higher learning, or at an approved business, trade, technical or other occupational school.
I have more than one child. Should I establish an account for each of my children?
Yes. Each account can only have one designated beneficiary. A parent could also open an account for one child and at a later date, change the designated beneficiary to another member of the child's family.
Do I have to be related to the designated beneficiary?
No. You may designate anyone, including yourself. There are no restrictions based on age, relationship to the account owner or state residency of either the account owner or the beneficiary. The tax benefits are not contingent on the beneficiary being a dependent of the account owner.
What if the beneficiary decides not to go to college or does not finish college?
Funds may be left in the account for the current beneficiary in the event he or she returns to school; or, you can designate a member of the beneficiary's family as the new beneficiary; lastly, the money could be withdrawn, but the entire withdrawal will be subject to New York income tax. Earnings will be subject to federal income tax, as well as the federally mandated 10% penalty.
If I open an account, will my child still be eligible for financial aid?
Funds in the account will not be considered in the determination of eligibility for New York State-administered financial aid programs. However, federal or institutional aid programs may consider the amount when determining eligibility.
Can I also claim a Hope Scholarship Credit or Lifetime Learning Credit for qualified tuition and other related expenses covered by New York's College Savings Program?
Yes, provided the other eligibility requirements for the credits are met.
Can I contribute to an Education IRA if I participate in New York's College Savings Program?
If you contribute to both programs during the same tax year for the same beneficiaries, the amount contributed to the Education IRA will be subject to an IRS excise tax.
Do I have to itemize my deductions to get the New York tax benefits of the program?
Account contributions are subtracted directly from gross income so that you do not have to itemize deductions.
I work in New York, but live in another state. Can I still get the New York tax benefits?
You will be able to deduct account contributions from your New York income. However, the tax benefits to a nonresident may be less than the tax benefit to a New York resident.
If I move out of New York State, what happens to my account?
You can keep contributing money to the account and continue to enjoy the benefits of federal and New York State tax-deferred growth.
Who will invest the money in the Tuition Savings Account?
The Office of the State Comptroller (OSC) has designated the Upromise Investments Corporation and the Vanguard Marketing Corporation as the programís managers.
What type of investments will be made?
New York's College Choice Savings Program currently includes two separate 529 plans. The Direct Plan is sold directly by the program. The Advisor Plan is also available, which is sold exclusively through financial advisors. Be aware that the Advisor Plan's fees and expenses are higher and include financial advisor compensation.
The Direct Plan offers a comprehensive lineup of 15 investment options - three age-based options (conservative, moderate, and aggressive) and 12 individual portfolios. You may choose up to five investment options per account. All of the investment options are managed by The Vanguard Group. To learn more about your investment options, please contact the program directly at 1-877-NYSAVES or visit the web site at www.nysaves.com.
Upromise Rewards Service
The Upromise Rewards service makes saving for college even easier. This is a free service that gives back a percentage of what you spend at thousands of Americaís leading companies as college savings. Once you have enrolled in this program, your Upromise Rewards Service account and your College Choice Account can be linked so that your reward dollars are automatically transferred to your College Choice Account on a periodic basis. To find out more information about how to make Upromise work for you, visit them on the Internet at www.upromise.com.
How will I be kept updated about my account?
Quarterly statements will reflect any activity in your account, including your current account balance. You can also access account information by calling 1-877-NYSAVES and you will have 24 hour a day access through the College Savings Program's web site www.nysaves.com.
For more information or an application form, please call 1-877-NYSAVES (1-877-697-2837) This toll free number is in operation from 8:00 a.m. through 9:00 p.m. EST, Monday through Friday. Or visit the College Savings Program's web site at: