| New York state 529 college savings plan are counted | | | | reason other than to pay for higher college education |
| to among one of the best plans in the state. One of | | | | expenses. In case the beneficiary becomes |
| the main reasons why it has become popular is the | | | | unavailable to pursue college education either due to |
| tax benefits that it offers. The plan is considered to | | | | death or due to some handicap, then the plan will |
| have the best tax cuts not just for New York | | | | continue to give out deductions. |
| residents, but also for residents from all over the | | | | 3. Gift Tax Incentives - The federal rules exclude an |
| nation. Here we discuss the three main incentives | | | | amount of $12,000 per year for an individual and |
| that you can get with the New York 529 Savings | | | | $24,000 a year for a couple from gift tax. If the |
| Plans. | | | | contribution to the account of a New York 529 |
| 1. Federal Tax Incentives - If the amounts invested in | | | | Savings Plan made by an account owner does not go |
| the New York 529 Savings Plans are withdrawn for | | | | beyond this amount, then the contributions will |
| the purpose of the education of the beneficiary | | | | continue to enjoy a gift tax-free status. This gift |
| itself, then there will be great federal benefits. This | | | | incentive will take into amount all other gifts that are |
| will also allow the assets to grow deferred from tax. | | | | made by the same person to the beneficiary too, |
| If the amounts are withdrawn for a nonqualified | | | | and that amount will be deducted from the total |
| purpose, then there is a 10% federal penalty tax, and | | | | amount eligible for gift tax. |
| the federal incentives are stopped. | | | | There is also an option of splitting the gift tax |
| 2. State Tax Incentives - The state benefit on New | | | | deductions into a five-year period on an equal division |
| York's 529 plan is applicable to the tune of $5000 for | | | | basis. The maximum contribution that an |
| an individual payer, and double that amount for a | | | | accountholder makes on a New York 529 Savings |
| couple making a joint file. This is applicable only to | | | | Plan is $60,000 and $120,000 for couples. Supposing a |
| taxpayers who pay within the state of New York, | | | | person makes this maximum investment, it becomes |
| and might not be quite feasible for those who are | | | | five times the maximum allowable gift tax for |
| coming in from other states. These deductions will | | | | deferment. Hence, the accountholder can split the |
| cease to exist if a withdrawal is made to pay for | | | | total amount to be eligible for gift tax deductions |
| expenses that can be classified as nonqualified | | | | over a five-year period. |
| withdrawals, i.e. the withdrawals that are made for | | | | |