More accounts and $36,100 in incentives added in first half of 2023

Almost twice as many people as last year have started saving for higher education with DE529 Education Savings Accounts according to State Treasurer Colleen Davis. More than 1,400 new DE529 accounts opened through June of 2023, a number 41% higher than during the same time last year.

“As the cost of college and trade school continues to rise, it has become more crucial than ever for families to plan for their children’s future,” said Treasurer Davis. “Our office is proud to sponsor the DE529 Education Savings Plan, which provides tax-advantaged accounts designed to help parents, grandparents and others pay for higher education expenses.”

Managed by Fidelity Investments, money in a DE529 account grows on a tax deferred basis, and withdrawals for qualified expenses like tuition, fees, and books are federal and Delaware income tax-free.

In addition to making the plan available, the Office of the State Treasurer (OST) and the Plans Management Board, the group that directs and serves as trustees of the money invested in the plans, credit the First State, First Steps incentive program with boosting enrollment.

“Through the first half of the year, 361 new DE529 accounts qualified for the First State, First Steps incentive which makes a $100 contribution to eligible accounts,” Davis said. “If the beneficiary is five years of age or younger and a Delaware resident at the time of account opening, the DE529 plan will add the contribution to every new account opened with an initial deposit of at least $100.

To help spread the word about DE529 and the benefits of saving for higher education, Fidelity recently sponsored Kids’ Day at the Delaware State Fair. DE529 is also the proud sponsor of “Kids Run the Bases” after every Sunday afternoon home game of the Wilmington Blue Rocks, and serves as the exclusive sponsor of the Route 1 Rivalry between the University of Delaware and Delaware State University.

For more information on the DE529 Education Savings Plan and the First State, First Steps program, visit 529.delaware.gov.

With Memorial Day falling on May 29th, we have the opportunity to remember the heroes of our past and take the opportunity to invest in the heroes of our future…our children. State Treasurer Colleen Davis once again joins the nationwide celebration of saving for higher education.

529 Day, which takes place every year on May 29th (5/29), is a day dedicated to promoting awareness and encouraging families to save for college through a 529 savings plan. These tax-advantaged investment accounts allow parents, grandparents, and other family members to save for a child’s education expenses, such as tuition, books, and housing.

“We believe that every child deserves the opportunity to pursue their dreams and achieve their full potential, and a DE529 savings plan can help make that a reality,” Treasurer Davis said. “I’m proud that our office sponsors the DE529 Education Savings Plan and takes the lead in raising awareness about the importance of saving for higher education.”

Contributions to DE529 accounts now come with additional benefits. “First State, First Steps” is an incentive program for Delawareans to start saving early. The pilot program provides for a $100 contribution to a DE529 Education Savings Plan account if:

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

Additionally, this year marked the first time that Delawareans filing their state tax returns could take deductions for DE529 contributions.

To help spread awareness of the DE529 Education Savings Plan, Treasurer Davis will host a community resource fair Thursday May 25, 2023, at the Wilmington PAL Center at 3707 North Market Street in Wilmington. The event is presented in partnership with Fidelity Investments, the Delaware NAACP, the Metropolitan Wilmington Urban League, the Police Athletic Club of Wilmington, and the UD Center for Economic Education and Entrepreneurship.

Members of the General Assembly joined in supporting education saving with the passage of HCR 47, sponsored by Rep. Krista Griffith and Sen. Trey Paradee, declaring May 29th DE529 Day in Delaware.

To learn more about 529 plans and how you can start saving for your child’s future, visit 529.delaware.gov.

Also, unused education savings can soon rollover for retirement

“First State, First Steps,” a pilot incentive program for Delawareans offering a $100 contribution to a new DE529 Education Savings Plan account added $37,700 to accounts over the last six months of 2022.

“I am thrilled that our First State, First Steps program gave 377 young Delawareans a head start on saving for college,” State Treasurer Colleen Davis said. “Because of the project’s success, the Plans Management Board approved its extension until at least June 30, 2023.”

First State, First Steps will contribute $100 into every newly opened DE529 account if:

• The beneficiary is five years of age or younger at the time of account opening
• The beneficiary is a Delaware resident at the time the account is opened
• A minimum contribution of at least $100 is made to the DE529 account when the account is opened

Managed by Fidelity Investments, the DE529 Education Savings Plan provides tax-advantaged accounts designed to help parents, grandparents and others pay for higher education expenses. Withdrawals for qualified higher education expenses like tuition, fees, and books are federal and Delaware income tax-free.

Money in a DE529 account not spent on education costs can now continue to help with future saving thanks to the recent passage of the Secure 2.0 Act in the omnibus spending bill supported by Treasurer Davis, approved by congress and signed by President Biden at the end of December.

“The need to save for future expenses goes beyond the college years and beginning in 2024, money left in a DE529 account can be rolled into a Roth IRA belonging to the beneficiary of the 529 account,” Treasurer Davis said. “Up to $35,000 in total can be moved without penalty though funds cannot exceed Roth IRA annual contribution limits, and the DE529 account that holds the money will need to have been open for at least 15 years.

For more information on the DE529 Education Savings Plan and the First State, First Steps program, visit 529.delaware.gov.

A gift to a DE529 account will last well past the holiday season

The holiday season can be stressful as shoppers search for the perfect present. Opening a DE529 Education Savings Plan account or contributing to an already existing account lets you not only cross a gift off of your list but provide for the future as well.

“There’s no getting caught up in the frenzy of shopping malls and you won’t have to deal with supply chain issues when you give the gift of investing in a loved one’s future,” said Delaware State Treasurer Colleen Davis. “Saving for college never goes out of style like trendy fashion, so why not save instead of spending?”

According to the College Savings Plans Network, over $412 billion are being set aside all over the country for education expenses. In Delaware, $40.6 million were held in DE529 accounts as of the end of the third quarter of 2022.

The DE529 Education Savings Plan makes it easy and affordable to plan ahead for the cost of higher education at colleges & universities, technical & community colleges, trade schools, and many other post-secondary education programs. Sponsored by the State of Delaware and managed by Fidelity Investments, DE529 provides tax-advantaged accounts designed to help parents, grandparents and others pay for higher education expenses.

“You won’t pay any taxes on your money as it grows,” said Treasurer Davis, “plus, withdrawals for qualified higher education expenses like tuition, fees, and books are federal and Delaware income tax-free.”

Opening a new DE529 account for a child under the age of five makes your gift even bigger this year. “First State, First Steps” is an incentive program providing a $100 contribution to a DE529 Education Savings Plan account as long as the beneficiary is a Delaware resident, and the initial investment in the account is at least $100.

To learn more, visit 529.delaware.gov before making your holiday shopping list.

Act now to save money when filing your 2022 tax return next year

Thanks to a new law enacted by the Delaware General Assembly, Delaware taxpayers have new opportunities to save money.

Delawareans who save for school with the DE529 Education Savings Plan may qualify for a new tax deduction on their state returns.

“While our office oversees the management of the State’s investment portfolios, we also administer the DE529 Education Savings Plan which allows people to invest in the future of their loved ones,” said State Treasurer Colleen Davis. “Implementing a new tax deduction for DE529 contributions strengthens our commitment to helping people achieve a quality education without facing the possibility of years of student loan payments.”

Delaware tax filers are now eligible to deduct up to $1,000 of contributions to DE529 Education Savings Plans each year on their Delaware tax return (or $2,000 for joint returns) with a few additional conditions.

The deduction will NOT be available for:

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

“The Department of Finance is pleased to announce that this tax benefit will be available for qualifying contributions made throughout 2022,” said Secretary of Finance Rick Geisenberger. “With the completion of a newly launched personal income tax module of the State’s Integrated Revenue Administration System (IRAS), considerable programmatic changes were made to enable administration of this new tax benefit for qualifying 2022 tax filers.” Official notice of the “go-Live” for these technology updates was published to the December 2022 Register of Regulations, thereby allowing the tax deduction for qualifying contributions to DE529 Education Savings Plans made after December 31, 2021.

The passage of House Bill 145 earlier this year also creates a tax deduction for contributions to a DEPENDABLE account for people with disabilities. The deduction applies to any amount up to $5,000 ($10,000 for couples filing a joint return).

“DEPENDABLE allows individuals with disabilities and their families save money above the $2,000 threshold that jeopardizes state and federal means-tested benefits,” said Treasurer Davis. “DEPENDABLE accounts allow people with disabilities to be able to work, able to save, and able to thrive.”

Those without a DE529 Education Savings Plan or DEPENDABLE account can take advantage of the tax deductions by opening accounts today at 529.delaware.gov or able.delaware.gov.