Relates to contributions made to college savings accounts

Title of bill

An act to amend the education law, in relation to authorizing personal tax refunds to be contributed to accounts under the college savings program

Purpose or general idea of bill

Expands contribution options for individuals who choose to invest in higher education by authorizing taxpayers to make direct deposit contributions of personal income tax refunds into a New York State 529 College Savings Program.

Summary of specific provisions

This legislation amends subdivision 4 of section 695-e of the education law to authorize taxpayers to directly deposit all or a portion of their personal income tax refund to the New York State College Choice Tuition Savings (529) Program.

Contributions must be a minimum of twenty five dollars and can be applied only for the tax year in which the refund was issued. Once a taxpayer has elected to contribute a specified amount of funds to a New York State 529 College Savings Program, the deposit cannot be changed or revoked.

Taxpayers may not contribute their tax refund to a New York State 529 College Savings Program if their refund is reduced below the twenty-five dollar minimum.

Justification

Under existing law, individuals wishing to invest funds into a New York State 529 College Savings Program can deposit funds via electronic bank transfer, check, payroll deduction (if available through an employer) or by a rollover from another college savings, vehicle. However, when New Yorkers receive their sometimes sizable state income tax refund they cannot currently send that refund directly to a college savings account. Allowing taxpayers to directly deposit funds from their income tax refunds into such accounts will increase opportunities for taxpayers to invest in existing savings plans and help defray the ever increasing costs associated with higher education.

Fiscal implications

None.

Legislative history

This is a new bill.

Effective date

This act shall take effect January 1st.