Question about NY 529 plan

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md01
Posts: 5
Joined: Sat Apr 21, 2018 10:19 am

Question about NY 529 plan

Post by md01 » Sun Jun 24, 2018 7:05 pm

Hello,

I am just starting out on setting up a 529 plan for my child. I am an NYC resident, and plan to contribute through the direct plan offered by NY state as detailed here: https://www.nysaves.org/

In reading about it, I understand we can claim state tax deductions on contributions of up to $5000/year if filing single, and $10000 if filing married filed jointly(MFJ). The plan is for my wife and I to contribute exactly $10000 for this year, so that we can maximize the tax benefit, but how to do so is the question. We have 2 options.

1. Each one of us(my wife and I) sets up an account with my kid as the beneficiary and contributes $5000.0 This is a straightforward method for claiming the tax deduction on the $10000.0

2. We create only one account with one of the us as the owner of the account and our kid as the beneficiary and contribute $10000.0 for this year in that account.

Can we claim the tax deduction on the $10000.0 with option #2 if filing MFJ? If yes, I'd prefer to do so as it requires keeping track of only account. I haven't thought through other benefits of having multiple 529 accounts( as in option 1) - so any pointers on that will be much appreciated as well. Thanks!

Outafter20
Posts: 120
Joined: Tue Oct 18, 2016 1:44 pm
Location: New York for now.

Re: Question about NY 529 plan

Post by Outafter20 » Sun Jun 24, 2018 7:12 pm

md01 wrote:
Sun Jun 24, 2018 7:05 pm
Hello,

I am just starting out on setting up a 529 plan for my child. I am an NYC resident, and plan to contribute through the direct plan offered by NY state as detailed here: https://www.nysaves.org/

In reading about it, I understand we can claim state tax deductions on contributions of up to $5000/year if filing single, and $10000 if filing married filed jointly(MFJ). The plan is for my wife and I to contribute exactly $10000 for this year, so that we can maximize the tax benefit, but how to do so is the question. We have 2 options.

1. Each one of us(my wife and I) sets up an account with my kid as the beneficiary and contributes $5000.0 This is a straightforward method for claiming the tax deduction on the $10000.0

2. We create only one account with one of the us as the owner of the account and our kid as the beneficiary and contribute $10000.0 for this year in that account.

Can we claim the tax deduction on the $10000.0 with option #2 if filing MFJ? If yes, I'd prefer to do so as it requires keeping track of only account. I haven't thought through other benefits of having multiple 529 accounts( as in option 1) - so any pointers on that will be much appreciated as well. Thanks!
Yes. I have been doing this with New York's 529 Plan since 2005. It's a very good plan...all Vanguard funds.

md01
Posts: 5
Joined: Sat Apr 21, 2018 10:19 am

Re: Question about NY 529 plan

Post by md01 » Sun Jun 24, 2018 7:14 pm

Outafter20,
Just to be clear, you're saying I can do option #2 and claim tax deduction on the $10000 while filing MFJ?

Outafter20
Posts: 120
Joined: Tue Oct 18, 2016 1:44 pm
Location: New York for now.

Re: Question about NY 529 plan

Post by Outafter20 » Sun Jun 24, 2018 7:16 pm

md01 wrote:
Sun Jun 24, 2018 7:14 pm
Outafter20,
Just to be clear, you're saying I can do option #2 and claim tax deduction on the $10000 while filing MFJ?
Absolutely. $10,000 is the maximum deduction when filing MFJ.

maineminder
Posts: 31
Joined: Sat Sep 24, 2011 9:48 am

Re: Question about NY 529 plan

Post by maineminder » Sun Jun 24, 2018 7:19 pm

It's been a while since I contributed to the NY 529, but I believe you can do #2. I have two kids, so my spouse was the owner on one and me on the other. Granted not exactly the same as you.

The reason I say you can do this is when I filled out my MFJ tax return claiming the $10K I was never asked how many 529's I contributed to nor who contributed what dollar amount. Depending on the year the money came from a joint account, or a single owner account or both. I don't remember receiving any IRS related forms to help with filing taxes either. I'm guessing if I ever got challenged I could show the deposits totaling 10K and be done with it.

Getting the money out is a different story since you'll get some IRS forms to help with filing. But nowhere on those forms does it say who actually did the deposit, just the beneficiary. Anyone can contribute to your kids 529. It won't matter then either.

md01
Posts: 5
Joined: Sat Apr 21, 2018 10:19 am

Re: Question about NY 529 plan

Post by md01 » Sun Jun 24, 2018 7:40 pm

Thanks, both of you! This is very useful information I couldn't find elsewhere, and helps with our decision making.

blevine
Posts: 1861
Joined: Sat Feb 27, 2010 3:57 pm
Location: Paradise

Re: Question about NY 529 plan

Post by blevine » Sun Jun 24, 2018 8:18 pm

I had funded and already spent the NY 529 on 2 kids.

While I did open 2 accts, mainly so I could name 2 beneficiaries, that turned out to not be necessary when they were young. Most certainly you can open one acct, add $10k/year while married filing jointly. Down the line if you want to split for 2+ kids, you can easily open more accts and roll over funds to another beneficiary. And the acct owner can all be same or not.

So the only reason for multiple accts is for multiple kids, but if only 1 kid now, open one acct. Easy to change later.

seawolf21
Posts: 225
Joined: Tue Aug 05, 2014 7:33 am

Re: Question about NY 529 plan

Post by seawolf21 » Sun Jun 24, 2018 10:30 pm

Either option works.

http://cdn.unite529.com/jcdn/files/NYD/ ... ooklet.pdf
What Tax Benefits Can I Receive?

• If you are a New York State taxpayer, you may deduct up to $5,000 ($10,000 for married couples filing jointly) in computing your state taxable income each year. Only you, as the Account Owner, can take the tax deduction and only on contributions you or your spouse make to your Account.
If you have multiple kids and they are not close in age, you may want separate accounts due to different time horizons on when the account will be cashed out.

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