Ten days remain before application deadline

The application period for the new ASPIRE529 program, which provides $529 for foster youth aging out of the system to use for expenses related to continuing their education, closes July 31, 2022.

“Many young adults face a lot of financial obstacles as they head out into the ‘real world’ for the first time,” said Delaware State Treasurer Colleen Davis. “Those aging out of foster care often face additional struggles related to things like housing and health care. How to pay for education shouldn’t be an extra burden.”

Up to 20 awards of $529 are available on a first-come, first-served basis following review and approval of applications by the Office of the State Treasurer.

To be eligible for an award, a student must:

• Be under age 26, and:
  • At least 14 years old and currently in Department of Services for Children, Youth, & Their Families (DSCYF) Custody (foster care); or
  • Exited DSCYF Custody to adoption or guardianship at the age of 16 years or older; or
  • Aged out of foster care in Delaware at age 18.
• Complete a current-year Delaware Aspire529 application prior to the deadline. (July 31st)
• Be a Delaware resident.
• Be a U.S. citizen, permanent resident, or approved refugee.
• Be an undergraduate student.
• Show proof of enrollment or attendance at an institution of higher learning or trade school, AND if already attending, must be making satisfactory academic or vocational progress toward completion of that program. Proof of enrollment or attendance can be requested through your school’s registrar or administrative offices.

In addition to the $529, recipients will receive two private financial coaching sessions thanks to a partnership with $tand By Me®.

The online application can be found at de.gov/aspire529.

Qualified accounts to receive $100 contribution

Continuing her commitment to make saving for higher education easier, Delaware State Treasurer Colleen Davis announces the “First State, First Steps” program.

“I have said time and time again that it’s never too early to save for college and ‘First State, First Steps’ will help people get started,” Davis said. “I know families with young children have competing financial priorities, so we want to help them get started.”

“First State, First Steps” is an incentive program for Delawareans. The program provides for a $100 contribution to a DE529 Education Savings Plan account opened between July 1, 2022, and December 31, 2022.

In addition to the account being opened during the applicable time period, in order to qualify for the $100 incentive:

• The beneficiary must be five years of age or younger at the time of account opening
• The beneficiary must be a Delaware resident at the time the account is opened
• A minimum contribution of at least $100.00 must be made to the DE529 account when the account is opened

Delaware’s 529 Plan is sponsored by the State of Delaware and managed by Fidelity Investments. The Plan provides tax-advantaged accounts designed to help parents, grandparents and others pay for higher education expenses.

The cost of a four-year public college has increased 225% over the last 30 years, according to the College Board. Each year it becomes harder and harder for families to afford a quality education without setting themselves up for years of student loans payments.

“The student loan balance for Delawareans averages more than 37-thousand dollars,” Davis said. “Proper saving can help students graduate without facing years of loan payments allowing them to save for other financial goals including a home, car, and retirement.”

Money in a DE529 account grows on a tax deferred basis, and withdrawals for qualified education expenses like tuition, fees, and books are federal and Delaware income tax-free.

For more information on the “First State, First Steps Program,” visit 529.delaware.gov.

With the signing of House Bill 145, Delawareans who make contributions to DE529 Education Savings Plan accounts, or DEPENDABLE accounts, will be eligible for a deduction from their federal adjusted gross income (AGI) when filing their income taxes.

“Creating pathways to economic empowerment remains one of my top priorities for our office,” said State Treasurer Colleen Davis.” There’s no better way to create that safeguard than by saving, be it for education or the future needs of a person with a disability.”

The new law creates a tax deduction for any amounts up to $5,000 ($10,000 for couples filing a joint return) contributed to a DEPENDABLE account, and a similar deduction of up to $1,000 ($2,000 for joint returns) into the DE529 Education Savings Plan.

“DEPENDABLE is Delaware’s own ABLE (Achieving a Better Life Experience) program that allows individuals with disabilities and their families to save for a broad range of expenses on a tax-advantaged basis without jeopardizing their state or federal benefits,” Davis said. “There’s no limit to what people with disabilities can do so there’s no reason to limit their savings. This new tax deduction will help them save even more.”

The deduction will take effect for contributions made after December 31, 2021, by the account owner or anyone else.

A new deduction will also become available for contributions to DE529 Education Savings Plan accounts in some cases. Federal adjusted gross income will be reduced for any contribution up to $1,000 (or $2,000 for joint returns) with a few conditions.

The deduction will NOT apply to:

• Tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school
• Individuals with a federal AGI greater than $100,000 (or $200,000 for joint returns).

Deductions for couples with an AGI below $200,000 are capped at $2,000.

The deduction for contributions to DE529 Education Savings Plan accounts takes effect on January 1st of the calendar year following notification from the Delaware Secretary of Finance to the Register of Regulations of the availability of the funds.

“A college degree should come with pride, joy, and hope for the future, not fear and worry over future student loan payments,” Davis said. “Incentivizing Delawareans with this additional tax benefit will hopefully increase their saving and reduce future debt.”

The Delaware Plans Management Board administers both DEPENDABLE and the DE529 Education Savings Plan. Board Chair Donna Vieira, executive vice president and chief commercial officer for Sallie Mae, sees the deductions as another valuable tool.

“A primary goal of the Plans Management Board is making saving a priority for Delawareans,” Vieira said. “I commend Treasurer Davis and members of the General Assembly for showing their commitment to the financial wellness of families up and down our state.”

“If a parent contributes just $1,000 a year to a 529 account beginning the year the child is born, the account could grow to $44,000 by the time the child turns 18,” said Rep. Krista Griffith, prime sponsor of the legislation. “Thanks to HB 145, more working families will be able to provide their kids with a nest egg for their education. It will also go a long way in supporting those in the disability community by allowing up to $5,000 in tax deductions for ABLE accounts.”

“Putting aside money for the future can be an incredibly difficult proposition for many working families,” said Sen. Trey Paradee, the Senate prime sponsor of HB 145. “Parents saving for college or putting money away to secure a stable future for their child with disabilities deserve our support. I want to thank Treasurer Colleen Davis for all of her hard work on getting this bill passed and a big thank you to Governor John Carney for signing this important legislation into law.”

Sends almost $44 million to 55 municipalities

Using a secure process developed last year when the federal government sent American Rescue Plan Act of 2021 (ARPA) money to Delaware for its 55 non-county, non-metropolitan governments, the Office of the State Treasurer completed a second distribution to local municipalities to continue recovery efforts from the pandemic.

“The $43,956,383.61 we delivered over the past several days represents the second tranche of funds from ARPA for our local municipalities,” said Treasurer Davis.

As with the first ARPA distribution in June 2021, a dashboard on the State Treasurer’s website tracked the progress of the distribution process to Delaware’s 55 local municipalities. The dashboard can be found at de.gov/arpa.

“It became essential to get this money into the hands of the local decision makers as quickly as possible,” Treasurer Davis said. “I began advocating in early January 2021 for local municipalities to get the money directly from the U.S. Treasury, and not have them wait for distribution through the State like they waited for CARES Act money.”

Government officials must report annually on all of their funded projects, including descriptions, expenses, and status, but many local municipalities had questions about how the money could be used.

“Through our outreach, we realized many local municipalities lacked sufficient guidance with regard to meeting the requirements for the use of funds established by the federal government,” Treasurer Davis said. “As a result, we worked with the Governor’s office and the League of Local Governments to secure a centralized legal and compliance resource that local municipalities could use.”

The two-tranche distribution from the Office of the State Treasurer to Delaware’s local municipalities totals $87,912,767.23.

Delaware EARNS provides low-cost retirement savings plans

By a vote of 20 to 0 and 1 not voting, the Delaware State Senate passed House Bill 205 creating the Delaware Expanding Access for Retirement and Necessary Savings (EARNS) Program. The bill, which won House approval in May, now goes to Governor Carney for his signature.

“I am thankful that members of the General Assembly joined me in wanting to make sure every Delawarean has a reliable way to save for retirement,” Treasurer Davis said. “I’m especially grateful to Representative Lambert and Senator Poore for their sponsorship.”

Delaware EARNS is a “secure choice” program that amounts to State-facilitated, universally available retirement savings plans, providing a convenient way for all workers to save for retirement, particularly middle and low-income workers who lack access to employer-sponsored plans and small businesses that are unable to provide such a benefit.

“More than half of the State’s workforce lacks an easy way to save through a retirement program at work,” Davis said. “Not only will Delaware EARNS help those employees save for the future, it also benefits small businesses that may not be able to offer retirement plans to employees due to the cost and administrative burden, allowing them to attract and keep good employees by offering a crucial benefit like retirement savings.”

Delaware EARNS requires businesses with more than five employees that don’t currently offer a retirement plan to participate through a simple payroll process. The Office of the State Treasurer State Treasurer’s Office with the oversight of the Plans Management Board will handle all duties and functions of the plan once initial design and implementation takes place under the soon to be formed Delaware EARNS Program Board.

“The primary way for workers to save for retirement is through employer-sponsored plans, and now all employers will have a way to provide this essential benefit,” Davis said. “Delaware EARNS represents my continued commitment to bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence.”