529 plan in New York
August 9, 2017 8:50 AM   Subscribe

My daughter was born a few months ago and I'm now getting around to 529s - which one should I choose, though?

I live in NYC and will be here for the foreseeable future - so unless I'm missing something I think I'd just go with the NY 529 Direct Plan given that I'd get up to a $10k tax benefit on state taxes? I can't imagine there's be a plan from another state that could match that benefit, right? Is there way to see the various 529 benefits as applied to my specific situation?

One other thing I'm not 100% on is if you can sign up for a specific plan through vanguard or schwab? Like can I call schwab and ask them to open a NY Direct plan for me? Or can I only do that directly with the specific 529 and all transactions are handled directly through the state plans moving forward?
posted by jourman2 to Work & Money (8 answers total) 4 users marked this as a favorite
Other states' 529 plans will not qualify for state tax deductions in NY, no. (Note: these are deductions, not credits. So if you are deducting the maximum for married couples, $10K, then your actual "savings" will be probably at most in the $1K-$2K range.)

NY 529 Direct offers Vanguard fund investments. There's really no reason to add an additional middleman to the process (I'm not even sure you could). Opening an account on the NY Direct website is easy.
posted by praemunire at 8:57 AM on August 9, 2017 [2 favorites]

Or can I only do that directly with the specific 529 and all transactions are handled directly through the state plans moving forward?

This. The NY 529 is managed by Ascensus Broker Dealer Services, Inc. and everything goes through them. So there are fewer investment options vs a big brokerage and the fees may not be quite as good but you get the big tax break which should offset all that.

You can open a 529 from any state (I live in CA but have a Vanguard-managed 529 which is technically the NV 529 plan) but you won't get the tax break.
posted by GuyZero at 8:57 AM on August 9, 2017

Seconding the NV Vanguard 529 - I did that one even though I don't live in NV. I don't get a state tax break as a result, but I didn't like the weird off-brand options available in my state programs.
posted by Mid at 9:40 AM on August 9, 2017

Our 529s are with NY Direct and we have no complaints (other than that we moved out of state and now we don't get the deduction anymore).
posted by ThePinkSuperhero at 10:17 AM on August 9, 2017

We're in New York state, and set up our son's 529 through an investment planner affiliated with our bank. No additional fee to us.
posted by Lucinda at 10:59 AM on August 9, 2017

Just did this for my new son in NY. I think the NY tax savings are worth it given our high state/city income taxes, so I did a NY 529 plan. I also read reviews that the costs of the NY 529 bought directly are low and an excellent option. I just used: https://www.nysaves.org/ and signed up. I use Vanguard primarily for my personal investing, so was happy that these are Vanguard funds I knew/understood generally. I'll admit, I didn't dig into this extensively, but the people I talked to who dug into it more came to the same conclusion. I'll be watching this thread for more info, but I think you do want advice from someone who lives in NY who can comment on the NY specific plans/benefits for the most helpful advice.
posted by slide at 11:35 AM on August 9, 2017

When we lived in NY we just opened target age Vanguard funds through the Direct program directly through the NYSaves website. I did not think the managed funds seemed likely to offer enough additional benefit compared with the Vanguard funds to offset the management fees, and there didn't seem to be any benefits offered by non-NY 529 plans that were appealing enough to offset the tax benefit. Opening the accounts (for 2 kids) through the NYSaves website was very easy; I didn't see any reason to add an additional middleman to the process.

We have since moved out of NY but if you move the funds to a different state's 529 plan you have to pay back the tax benefits so I just left them there and opened new accounts in our new state.
posted by The Elusive Architeuthis at 2:25 PM on August 9, 2017

Response by poster: Update - I signed up for the NY 529 direct plan and it seems fine so far. Easy enough to set up a monthly contribution on ACH and the fees seem pretty low (though the investment options are not too plentiful - they're varied enough to find pretty much what I was looking for).
posted by jourman2 at 12:38 PM on September 8, 2017

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