Thought Leadership Thursday
Making 529s More Obtainable
Thought Leadership Thursday Article
As we move through September, spreading the word about the importance of saving for higher education is probably easier than during any other time of year. But when College Savings Month ends, that same job becomes even more important as the spotlight fades. As a member of the Executive Board of the College Savings Plans Network (CSPN) I strive to fulfill our mission of fostering initiatives and mobilizing resources to promote and enhance 529 plans all year long.
Financial resources became strained for many people over the past 2 ½ years as COVID forced many to readjust their spending and saving priorities. For families with young children, the thought of saving for college might have been as distant as high school graduation seems to parents of preschoolers.
Here in Delaware, we want to make sure families, especially those with young children, learn the value and benefits of saving early. "First State, First Steps" is an incentive program for Delawareans providing a $100 contribution to a DE529 Education Savings Plan account opened between July 1, 2022, and December 31, 2022. In order to qualify, the beneficiary must be a Delaware resident five years of age or younger at the time of the account opening, and the initial contribution of the account holder must be at least $100.
While money in a DE529 account grows tax free, plus, withdrawals for qualified education expenses like tuition, fees, and books are federal and Delaware income tax-free, we wanted to find yet another way to make saving for tomorrow more attractive today.
Our office proposed creating a new tax deduction for people making contributions to a DE529 account. Thanks to approval from the Delaware General Assembly, individuals with a federal adjusted gross income (AGI) less than $100,000 (or $200,000 for joint returns) will receive a deduction of up to $1,000 (or $2,000 for joint returns).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.
College graduates face numerous obstacles upon leaving school and entering "the real world." The reality of years of student loan repayments only makes it harder. And while it might sound absurd, many of those young men and women are the lucky ones. Far too many students coming out of high school don’t even pursue higher education because they didn’t have any savings at all to get started.
I encourage you to join me in promoting the value of 529 Education Savings Plans, finding ways to help families, especially those with young children, get started, and making the goal of securing a college education attainable.
Delaware State Treasurer
Executive Board Member, CSPN