Editor’s note: Kimberly Yee is the Arizona state Treasurer.
Saving early for a child’s future education is one of the most important decisions that a family can make. While it may be hard to imagine now, before you know it, your baby, toddler or preschooler will be a high school graduate getting ready for career training or college.
A dedicated savings can help students achieve their education and career training goals while minimizing the need for burdensome student debt.
As Arizona State Treasurer and the new Arizona’s Education Savings Plan Administrator, my vision is to bring 529 Plans to families who might not otherwise think about college or other post-high school training. Every child deserves the best education that positions them for success in life.
With a good financial plan, the opportunities for obtaining a quality education are endless, and this can start with opening an AZ529 Education Savings Account.
AZ529, Arizona’s Education Savings Plan, is a state-sponsored 529 Plan designed to provide a parent, grandparent, aunt, uncle, family friend or future student an opportunity to save for educational expenses in a tax-deferred manner. These savings can be used to pursue post-high school training and other educational opportunities.
Why should you open an AZ529 Education Savings Account for your young child?
1. Savings can be used to pay for expenses at a variety of educational institutions.
529 Plan savings can be used at accredited two- and four-year public and private colleges, universities, community colleges, technical training schools or apprenticeship programs. Post-high school education expenses covered by 529 Accounts include tuition and fees, books, supplies and equipment including computer technology, related equipment and software, as well as internet access or related services used by a student while enrolled at an accredited institution. 529 Account funds of up to $10,000 per year can also be used to pay for private K-12 school tuition. Additionally, you may use 529 funds to pay off up to $10,000 in student loans.
2. Anyone can contribute.
A great way to start saving early is to open an AZ529 Education Savings Account for your newborn child and encourage friends and family to celebrate your new arrival by investing in this account.
3. You receive tax benefits for 529 participation.
Contributions to 529 Plans of up to $2,000 per year by an individual, and up to $4,000 per year by a married couple filing jointly, are deductible when computing Arizona taxable income. This incentive adds to the ongoing tax benefits of a 529 Plan where assets grow tax-deferred and withdrawals are tax-free when funds are used for qualified higher education or K-12 tuition expenses. These benefits were designed to encourage friends and family to invest in a student’s future education. There are also federal estate-planning benefits, allowing tax-free gifting of up to $15,000 a year per beneficiary for an individual or up to $30,000 a year per beneficiary for a married couple to a 529 Plan.
4. You can choose from a variety of investment plans.
Arizona’s Education Savings Plan offers a variety of investment choices, from FDIC-insured CDs to mutual funds, designed to meet your preferred investment style and risk tolerance level. Arizona offers three approved 529 Plan choices. These are: Fidelity Arizona College Savings Plan; Ivy InvestEd 529 Plan (available only through a financial advisor); and College Savings Bank, which offers FDIC insured savings accounts and certificates of deposits (CD’s). With these options, you can choose the plan that best fits your unique investment goals and preferences.
5. You can open an account with just $25.
Once a 529 Account is established, any person who desires to save for qualified higher education expenses, even for oneself, can contribute to an AZ529 Education Savings Account. Parents can save for their children. Grandparents can save for their grandchildren. Aunts and uncles can save for their nieces and nephews. Friends can save for their friends.
It’s never too early or too late to start saving for college or other post-high school education options. As the administrator of this plan, I look forward to expanding these opportunities for Arizona families to access education, from traditional college to vocational training and apprenticeships. Arizona 529 Plans provide numerous options to lay the groundwork for maximizing savings and helping your young child reach their future educational goals. To learn more about opening an AZ529 Education Savings Account, visit https://az529.gov.
The Honorable Kimberly Yee serves as the 36th Treasurer of Arizona. As Arizona’s chief banking and investment officer, she safeguards approximately $19 billion in assets and stewards the cash management of Arizona’s $40 billion state budget and related payments to state agencies, local governments and public schools. As Treasurer, she also serves as the Chairman of the State Board of Investment and the State Loan Commission and is a member of the State Land Selection Board. With eight years of experience in the Arizona Legislature, as well as four years working for the Arizona State Treasurer’s Office, Treasurer Yee brings a unique perspective to this important financial leadership role for Arizona.