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Give the Gift of Education with an AZ529 Education Savings Plan this Holiday Season

By Hon. Kimberly Yee, Treasurer of Arizona


Every child deserves the best education that positions them for success in life. As a mother, I understand the importance of paving a pathway for our children to experience a future with boundless opportunities. That's why, as Arizona's State Treasurer, I'm expanding opportunities for all Arizona families to access higher education, from traditional college to vocational training and apprenticeship programs.


What is the AZ529 Education Savings Plan? The AZ529 Plan is a tax-deferred investment plan designed to help families save for their children’s or grandchildren'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 an AZ529 Plan can be deducted from your Arizona state income taxes of up to $4,000 per beneficiary for a married couple filing jointly or up to $2,000 per beneficiary for single filers. There's no limit on the number of beneficiaries for your tax deductions.

 

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?  There is good news! Beginning this year, families now have the option of transferring 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.

Who can participate? Anyone can contribute to an AZ529 Account and receive the tax benefits for their contributions! 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. You can even open your own AZ529 Plan and save for yourself!

 

With the holiday season quickly approaching, consider giving your loved ones the gift of saving for their future education by contributing to their AZ529 Education Savings Plan. Contributions from parents, grandparents, relatives and family friends provide gifts with long-term meaning for their youngest loved ones to help them save for their future education. However, if giving children a card that says, “I helped you save for college,” seems less than magical, I have 4 suggestions that will get them excited about their future education.

 

1.     Inspire them with a career costume.

Give your little one a chef’s hat, astronaut costume, or other career dress-up option with a note saying you believe they can be whatever they desire in the future, and that you have contributed to their AZ529 Plan to help them achieve their future dreams.

 

2.     Help them learn more about different careers.

Find a book about a future career that they might find interesting about a "Dream Job" and then give them the book with a bookmark that says you have contributed to an AZ529 Plan to support their future dream career.

 

3.     Experience The Future

Take children to a museum or activity that helps inspire a future career, or purchase a season pass to the Science Center, Natural History Museum, Musical Instrument Museum or other destination. Children are full of passions waiting to be discovered! When they see the endless possibilities of what they can accomplish in the future, let them know that you have contributed to their AZ529 account.

 

4.     Split it 50/50.

If a physical toy or gift to unwrap is a requirement, you can split the cost of what you normally budget for the entire present and take half the funds to spend on the physical gift item while contributing the other half of that amount to donate to the child's AZ529 account.

 

As we enter this holiday season, I extend my sincere wishes for a special and joyous time shared with your loved ones. Investing in a child's education is a unique and meaningful gift that will go a long way. The smart financial choices and planning you do now for your child's or grandchild's future can ensure that they will experience the education they desire while securing the financial freedom they deserve.   


Kimberly Yee is the Treasurer of Arizona. For more information about the AZ529 Education Savings Plan, visit http://www.az529.gov.

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