Secure Your Future
An efficient way to save for your kids’ college education
Dec 7, 2006 2:01 PM
One of the best ways to secure your future is to provide for the college education of your children, grandchildren or other loved ones. As educators you probably recognize this more than most people.
There are different ways of saving for the very large costs of a college education. One is through a federally tax-advantaged program known as a 529 plan. Under this type of plan, you contribute after-tax money that is invested and grows. When you use this money to pay for covered education expenses, such as tuition, fees, room and board, supplies, books, etc., you are not required to pay taxes on the income generated by the investment. Recent legislation in Washington just made this tax benefit permanent. It had been scheduled to expire in 2010. The removal of this uncertainty about the tax advantage should make 529 plans even more popular.
Besides the benefits of the federal income tax savings, New York’s 529 College Savings Program allows New York State taxpayers to deduct up to $5,000 per year ($10,000 for married couples filing jointly) on their New York State income tax return. That’s like a $250 to $600 savings in taxes — depending on your tax bracket. Residents of other states can contribute to this plan, but they should check to see if their state offers tax or other benefits not available through New York’s program. Qualified withdrawals are also exempt from New York State income taxes. The New York State plan offers a variety of investment options managed by the Vanguard mutual fund company.
For detailed information on New York’s 529 College Savings Program, call 1-800-420-2671 or check the Web site www.nysaves.org. The New York State plan has been recommended by Money Magazine as one of the finest in the nation.
For those of you who want to contribute to this plan, there is more great news. You can make your contributions as automatic as your tax-deferred annuity. Like with your TDA, contributions will be deducted from your pay before you receive the paycheck.
Payroll Administration Memorandum No. 20, 2004-05, describes how to enroll in the Department of Education’s salary deduction program. Ask your school secretary for the memo.
This program has been available since 1998. It is an opportunity no one who wishes to save for their loved one’s college expenses should miss, so enroll now!
New law seeks to prevent identity theft
As of Nov. 1, New Yorkers have the right to request that a security freeze be placed on their credit files. This freeze can aid in the prevention of identity theft by thwarting someone who tries to get credit cards in your name. Consumer Protection Board chair Theresa Santiago said that “blocking access to your credit files, in most cases, will prevent someone from using your name and credit information to establish a new line of credit.”
A security freeze can only be obtained by sending a letter by certified mail or overnight courier to each of three credit reporting agencies: TransUnion, Experian and Equifax. The service is free if a consumer is making this request for the first time. However, a $5 fee can be charged for subsequent requests, as well as to remove or temporarily lift a security freeze. No fees are charged to victims of identity theft provided they submit a signed police report or an ID Theft Victim’s affidavit obtained from the Federal Trade Commission.
The freeze will take effect within five business days after your letter is received. Within 10 days, the credit bureaus must send a letter informing you that the security freeze is in place and giving instructions on how you can remove or temporarily “thaw” this credit freeze. The letter will also include a personal identification number (PIN) to be used when you call a credit bureau in the future.
The security freeze can be temporarily lifted for a specific period of time or for a specific company or creditor. To do this, you must write or call the credit bureaus using the PIN. This “thaw” will cost $5 and the credit bureaus will have three days to carry out the request. You should plan ahead if you intend to borrow money, finance a purchase or obtain a new credit card.
You can use one of the sample letters available online at www.nysconsumer.gov. Further information is available on the credit bureaus’ Web sites. Here is contact information for the three bureaus:
TransUnion
Fraud Victim Assistance Department
PO Box 6790
Fullerton, CA 92834
1-888-909-8872
www.transunion.com — under “Identity Theft” click on “Victims of Fraud” then on “Restoring” and then on “Security Freeze” under Item 1.
Equifax Security Freeze
PO Box 105788
Atlanta, Georgia 30348
1-800-685-1111
www.equifax.com — click on “Learning,” then on “Identity Theft” and then on “Preventing Identity Theft” and scroll down.
Experian Security Freeze
PO Box 9554
Allen, TX 75013
1-888-397-3742
www.experian.com/consumer/security_freeze.html
Applying the credit freeze is very protective and helpful in guarding against identity theft. It does, however, create some inconvenience for anyone who wants to apply for new credit because of the need to contact the credit bureaus to ask for a “thaw” in the freeze.
TRS tidbits
Office hours — Planning to visit the Teachers’ Retirement System? The office hours are Monday to Friday, 8:30 a.m. to 5 p.m. The office is closed on New York City office holidays, on Dec. 25, Jan. 1, Jan. 15 and Feb. 9. The office will be open Dec. 26 to Dec. 29.
The Quarterly Account Statement — Distribution of the third-quarter QAS began during the third week of November. If you haven’t received yours, check with the TRS; perhaps you do not have an up-to-date home address on file at the TRS.
Incorrect address — The TRS has identified 3,797 members with invalid addresses. A letter with a Change of Address form will be mailed to the members’ schools. TRS will not send any statements to these members until they have received completed Change of Address forms.
“Secure your future” is compiled and written by Mel Aaronson, Sandra March and Mona Romain, teacher-members of the NYC Teachers’ Retirement Board. For further information on items discussed, call your UFT borough office or the TRS. BRONX: 1-718-379-6200; BROOKLYN: 1-718-852-4900; MANHATTAN: 1-212-598-6800; QUEENS: 1-718-275-4400; STATEN ISLAND: 1-718-605-1400; Teachers’ Retirement System: 1-888-8NYC-TRS (692-877), www.trs.nyc.ny.us.
