Welcome to Smart Living! I’m so excited to share today’s podcast featuring the honorable Kimberly Yee, Arizona’s State Treasurer. We discussed an important topic for families: saving for college using Arizona’s 529 Plan. Whether you’re a parent of young children, planning for future kids, or even a grandparent, the 529 Plan offers a smart way to save for higher education without worrying about taxes or interest. Let’s dive into what the AZ 529 Plan is all about and how it could benefit your family!
What is the Arizona 529 Plan?
Arizona’s 529 Plan has been around for over 25 years. However, it wasn’t widely known or accessible until Treasurer Kimberly Yee took the initiative to move it from a small office and make it a statewide publicized entity. Since bringing the program under the State Treasurer’s Office in 2020, the number of new 529 accounts in Arizona has increased by an impressive 44,500!
The AZ 529 Plan is an educational savings account where families can save money for a child’s future educational expenses, whether it’s for a traditional college, vocational school, or even workforce training. You can open an account for your child, grandchild, niece, or nephew—and the best part? The money grows tax-free, and you won’t pay taxes on the earnings when the funds are used for qualified education expenses.
The Benefits of Saving with a 529 Plan
- Tax-Free Growth: Any interest or earnings your investment makes in the 529 account are tax-free.
- State Tax Deductions: Arizona taxpayers can deduct up to $2,000 (single filer) or $4,000 (married filing jointly) for contributions per beneficiary.
- Flexibility: The funds in a 529 Plan can be used for a variety of educational expenses, including tuition, room and board, books, and even access to the internet. It’s not just for university degrees—vocational and trade schools are eligible too!
- Gifting Contributions: Family members and friends can also contribute to a 529 account, making it a perfect gift alternative during holidays or birthdays. They also get the tax deduction!
- New Rollover Option: Starting in 2023, any leftover funds from a 529 account can be rolled over into a Roth IRA for the beneficiary, up to $35,000, providing even more flexibility for future financial planning.
A Statewide Effort to Reach All Families
One of the most notable efforts Treasurer Yee made was ensuring that information about the AZ 529 Plan reaches underserved communities. By translating materials into Spanish and Navajo, families in these communities have been able to access this valuable resource. Even small contributions of $15 a month can make a big difference over time.
An Engaging Way for Kids to Start Thinking About Their Future
To encourage financial literacy from an early age, Treasurer Yee launched a 5th and 6th Grade Essay Contest. Students write about their dream job and what it takes to get there, sparking conversations about the importance of saving for education. Winners from each county receive $529 towards a 529 account! This contest is open to students across Arizona and helps both students and families plan for the future.
Why Financial Literacy Matters
In addition to managing the AZ 529 Plan, Treasurer Yee is also passionate about financial literacy. Her office has implemented laws to ensure high school students in Arizona must complete financial literacy coursework to graduate. She’s also introduced laws to help families on government assistance learn financial skills to avoid falling back into the welfare system. These efforts ensure that Arizona families are better prepared for their financial futures.
How You Can Get Started
The Arizona 529 Plan is easy to set up, and anyone can contribute. To learn more about how you can start saving for your child’s education, visit AZ529.gov.
Saving for the future starts now, and the AZ 529 Plan is a smart, tax-friendly way to help make college and vocational education possible for your loved ones.
