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.

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.

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.

A day to recognize the importance of saving for education

As thousands of Delaware families prepare to celebrate high school graduations, many pair that joy with fear about how to pay for college.

State Treasurer Colleen Davis reminds Delawareans that a DE529 account can alleviate that fear and that 529 Day is a perfect time to start saving.

“Almost 10 percent of all Delawareans have student loans averaging more than $37,000,” Treasurer Davis said. “Each year it becomes harder and harder for families to afford a quality education without setting themselves up for years of student loan payments but enrolling in the DE529 Education Savings Plan can help.”

The DE529 Education Savings Plan provides a tax-advantaged program for Delawareans. Money from DE529 accounts can be used at almost all accredited colleges and universities nationwide and many vocational or technical schools for a wide range of qualified education costs. Money grows tax free, plus, withdrawals for qualified education expenses like tuition, fees, and books are federal and Delaware income tax-free.

“Section 529 of the internal revenue code allows for tax advantaged education savings programs, and that’s why May 29th became 529 Day,” Davis said. “The more we raise awareness of the DE529 Education Savings Plan, the more people we help, and thankfully, the message is working.”

New accounts in the DE529 Education Savings Plan reached almost 2,100 in 2021, an increase of 9% over the previous year. Contributions to DE529 accounts totaled $64.8 million in 2021, with deposits in December alone accounting for $6.89 million, the highest monthly total since 2016.

A new law awaiting the Governor’s signature could help Delawareans save even more. Sponsored by Rep. Krista Griffith and Sen. Trey Paradee, House Bill 145 creates a tax credit of up to $1,000 for contributions to a DE529 account. The bill received approval of the legislature in March. Additionally, members of the Delaware General Assembly officially declared May 29th “Delaware 529 Day” with the passage of HCR 83 earlier this month.

Continuing to make people aware of the benefits of saving with a DE529 account is a main focus of 529 Day, and that includes children.

“Engaging young people not only educates them, but also engages creativity, helping them to be prepared to thrive in their future,” Treasurer Davis said. “Our DE529 Education Savings Plan similarly builds a bright future for young people by helping them become college and career ready financially. We are proud to partner with the Delaware Museum of Nature and Science to share the importance of combining education and fun for Delaware’s children now that the facility has opened its doors for the first time since the end of 2020.”