College Planning for Baby

Don't put off starting a college savings plan

Planning for college while enjoying your new baby is not unheard of.  529 accounts, when begun early, can help tremendously when the college bill comes along.

Experts advise that parents investigate this state- sponsored tax-deferred savings plan that allows them to start saving now.

(Moira Tolan, associate professor of business, Mt. St. Mary College, Newburgh)

Moira Tolan, associate professor of business at Mount St. Mary College in Newburgh, says, “In New York State, you can start a 529 with as little as $25. There’s a small fee, usually 25%, to manage the account. The investment is exempt from federal income taxes and you are able to deduct $5000 a year from your New York state income taxes if you are single and $10,000, if you are married file jointly. 

She offers these 4 tips:

  1. The 529 account can be set up by anybody for the purpose of a beneficiary’s education. The person who opens the account controls it.
  2. If the child named does not go to college at age 18, the funds can be deferred until they choose to go. 
  3. If the child named doesn’t go to college at all, the investment can be transferred to another family member. If no eligible family members can be named beneficiary, then the account can be closed and earnings will be subject to federal income tax and an additional 10% federal income tax, as well as state and local income taxes. 
  4. In New York State the program is run by upromise. Although one investment company, Vanguard, manages the funds, individuals can invest directly through
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