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Saving for a Child’s Future and National 529 Day
By Hon. Kimberly Yee, Treasurer of Arizona
As the summer months approach, it is the perfect time for families to pause and take a break from the hustle and bustle of the academic school year. This is an opportunity to focus on what's ahead for your child's future and create a successful pathway towards their higher education and career dreams. As the Treasurer of Arizona, I help to expand opportunities for all Arizona families to access higher education, from traditional college, vocational training and apprenticeships. With an AZ529 Education Savings Plan, families can put aside savings to grow over time and provide the gift of higher education to loved ones.
What is the AZ529 Education Savings Plan? The AZ529, Arizona’s Education Savings Plan is a tax-advantaged investment plan designed to help families save for a child’s future education expenses. Savings in an AZ529 plan are free from federal income tax, and withdrawals remain tax-free when used for qualified education expenses. Contributions to the AZ529 plan can be deducted from Arizona state income taxes up to $4,000 per beneficiary for a married couple filing jointly or up to $2,000 per beneficiary for single filers.
What is 529 Day and why should families celebrate it? On May 29th each year, ‘529 Day’ is a day dedicated to raising awareness about the importance of saving for higher education with an AZ529 Education Savings Plan. It's an opportunity for families to learn about tax-advantaged savings vehicles and their benefits. Remember that it is never too early and never too late to start saving for a child’s future education.
How can the funds be used? AZ529 savings can be used to pay for a variety of higher education expenses, including tuition, fees, room, board, books, supplies and even internet access. AZ529 funds may be used at accredited public and private colleges, universities, community colleges, technical training schools and apprenticeship programs. Additionally, AZ529 savings can even be used on school tuition for private and religious K-12 educational institutions.
What if the child doesn’t go to college or use all their 529 money? If a child doesn’t go to college or vocational school, or doesn’t use all the money saved in an AZ529 plan, there is great news! The law now allows families the option of transferring qualified “leftover” 529 funds, of up to $35,000, into the account beneficiary’s Roth IRA retirement fund, free of any tax, penalty, or applicable income limits.
Who can participate? This is a wonderful opportunity for anyone to contribute to their loved ones’ AZ529 plan while receiving the tax benefits for the contributions! Parents can save for their children. Grandparents can save for grandchildren. Aunts and uncles can save for nieces and nephews. Friends can save for the children of friends. Individuals may also open an account for themselves!
As summer begins it’s an opportunity to set new goals and renew dedication to investing in a child’s future education and dreams. Smart financial choices and planning done now for a child or grandchild's future can ensure they will achieve the education desired while securing the financial freedom they deserve.
The Honorable Kimberly Yee is the Treasurer of Arizona. When she took office, she asked for the AZ529 Education Savings Plan to be placed under her administration. In a short period of time, Arizona’s 529 accounts have increased by 54,178 new accounts with $2.46 billion in AZ529 assets under management. She has reached diverse communities and families in every county of our state and increased access by translating materials into Spanish and Navajo. For more information about the AZ529 Education Savings Plan, visit
www.az529.gov.
