My partner and I live in NY State and file jointly.

I want to start investing into NY States 529 program here : https://www.nysaves.org/

I am planning to invest 10k per year for tax deduction and not withdraw the amount till my dependents are college-age

What I know about the plan

  • take 10k deduction for joint filers
  • investment opportunities with Vanguard Total Coverage Index Funds

What are the pros / cons of choosing NYs plan directly versus opening a 529 account via brokers like Vanguard / Fidelity who I am have non tax advantage brokerage account with ?

1 Answer 1


The biggest issue is the state tax deduction. If you choose the state plan you can get a state income tax deduction. If you pick some other 529 plan, then you don't get the state income tax deduction.

New York, like most of the 529 plans, allows you to put your money in a age based plan that will become more conservative as the child gets closer to college. New York also allows you to pick other portfolios that don't automatically adjust as the child ages, but does limit your ability to switch during the year.

You have to decide if the state tax break is worth it. If you are in the 6% bracket then the $10,000 deduction is worth $600. You could view not going with the state plan as a $600 fee on your contributions.

Most states recapture the tax break if you later roll the money out of the state 529 plan into another non-state plan. So if you know you will only be in New York for a year or two, you might decide to go with a non-state plan. Of course you can have multiple plans during the time before the child is done with college.

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