AZ529 Education Savings Plan is a paid advertiser of Sonoran Living
Busting Myths About 529 Education Accounts
By Hon. Kimberly Yee, Treasurer of Arizona
As the Treasurer of Arizona and Administrator of the AZ529 Education Savings Plan, the honorable Kimberly Yee helps expand opportunities for all Arizona families to access higher education, whether it is for traditional college, vocational training or even apprenticeship programs. This summer is the perfect time to help identify common myths that might keep people from efficiently saving for their children’s futures through the AZ529 Plan. That way, Arizona families can put aside savings to grow over time and provide the gift of higher education to loved ones.
It's never too early and certainly never too late to start saving for higher education expenses. The national student loan debt has hit $1.77 trillion, and surveys indicate that 26% of parents are not saving for their child’s future education. Studies also show that 6 out of 10 parents are not utilizing 529 Plans, despite these plans being the most simple and beneficial investment vehicle for education savings. It is important to recognize factors that might be holding families back from opening a 529 Plan.
Five Myths about 529 Plans:
1. Savings must be used for in-state tuition or at a four-year college:
AZ529 funds may be used at accredited public and private colleges, universities, community colleges, technical training schools and apprenticeship programs in any state. AZ529 savings can be used to pay for a variety of higher education expenses, including tuition, fees, books, and even internet access.
2. It’s a use it or lose it account:
You don’t lose the funds if the child you designated decides not to go to college. Leftover funds can be transferred to another family member without penalty. Families may also transfer qualified leftover 529 funds, (up to $35,000) into the account beneficiary’s Roth IRA retirement funds, free of any tax, penalty or applicable income limits.
3. It will harm my student when applying for financial aid:
There is little to no impact on financial aid eligibility for a student with a 529 Plan. For state financial aid, the balance in a 529 account will not be treated as income of the parents, nor of the student when determining financial need.
4. Only parents can open accounts for their children:
Anyone 18 and older can contribute to or open an AZ529 Plan and receive the tax benefits for their contributions. Grandparents, aunts and uncles and even friends can contribute to a 529 Plan. An individual can even open their own AZ529 Plan and save for themselves.
5. 529 Plans are only for families with lots of money:
The AZ529 Education Savings Plans are for everyone, regardless of income level. You can contribute as little as $15 a month and savings will grow tax-free over the years. Plans can be customized and created for those who want to keep the account simple or for the more experienced investor.
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. There is no limit on the number of beneficiaries you can file for each tax deduction.
The gift of a 529 Plan is more than just a financial contribution. It is a long-term investment towards a loved one's future that will last a lifetime.
Visit www.AZ529.gov for more information.
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
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