Delaware’s DE529 Education Savings Plan Upgraded

Morningstar, the country’s most widely cited and influential investment plan rating group issued its annual report and upgraded the DE529 Education Savings Plan from Bronze to Silver status. Morningstar specifically credited the oversight of the plan as a major factor for the upgrade.

“Delaware earns an Above Average Parent rating driven by its multiple layers of oversight and engaged partners. The state’s 11-member plans management board, two subcommittees, and an external investment consultant review any recommended changes to the plan,” according to the report.

Delaware also saw an increase in its People Pillar score, a rating measuring the strength and weakness of an investment team. Morningstar noted, “It’s a topnotch group in the 529 space worthy of a People Pillar upgrade to High from Above Average.” The DE529 Education Savings Plan is managed by Fidelity Investments.

“We have seen tremendous growth in our 529 plan over the past year,” said Treasurer Colleen Davis. “With this ratings upgrade, continued quality oversight by the Plans Management Board, and superior plan management by Fidelity Investments, we expect to grow even more with hopes of reaching Gold status in the future.”

As of September 30, 2023, there were 2,149 new DE529 accounts opened this year, an increase of 41% over the same time last year.

Of the 54 529 plans offered throughout the country, only two have Gold status with just 15 more achieving Silver.

“We are thrilled to have our rating boosted by Morningstar,” said Donna Vieira, executive vice president and chief commercial officer for Sallie Mae who serves as Chair of the Delaware Plans Management Board, the entity that oversees the state’s investment programs. “Saving for college is an important step, and families should feel good knowing that industry experts see the DE59 Education Savings Plan as a sound investment and a safe place for their money.”

“There is no doubt the State’s commitment to the plan, including the General Assembly approving tax incentives for contributions to DE529 accounts helped grow our numbers and lead to our upgrade” Treasurer Davis said. “We’re proud to offer a good, competitive product to help people save.”

Click here to read “Morningstar 529 Ratings: The Best Plans of 2023.”


529 Day is 5/29

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.


Almost $40,000 in “Free Money” Paid to DE529 Accounts

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.


New Tax Deduction for Contributions to Savings Plans

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.


Money Still Available for Foster Youth to Pursue Higher Education

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.