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Facts About Arizona's 529 Plans

By    |   Monday, 18 May 2015 12:30 PM

A 529 college savings plan can be just the tool a family needs to prepare for their child’s university education. By utilizing what CollegeSavings.org explains as "a tax-advantaged investment plan designed to encourage saving for future higher education expenses ...," families can eliminate the worry behind sending Junior to college by making small investments now to build up a much larger asset for later.

Withdrawals from the 529 plan are exempt from federal income tax as long as the funds are used for qualified educational expenses such as tuition, fees, books, and supplies. In Arizona combined contributions to 529 plans are state income tax deductible up to $2,000 per year for individuals and up to $4,000 per year for joint returns.

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Arizona offers three 529 college savings plans. Arizona Family College Savings Program and Fidelity Arizona College Savings Plan are direct consumer plans, while Ivy Funds InvestEd Plan is purchased through an advisor who can provide professional investing expertise.

The Arizona Family College Savings Program provides a choice of three CD options and one high-yield savings account, all FDIC-insured. CD maturities vary from one to 22 years depending on the plan, and penalties apply for early withdrawals. The minimum monthly contribution for the CD plans is $25, and the minimum initial contribution is $250 for the CD options and the savings account.

The Fidelity Arizona College Savings Plan offers three age-based and 12 static investment portfolios. The minimum initial lump-sum contribution is $50 with $25 monthly, while automatic investment minimum is $15 per month or $45 quarterly. This 529 plan provides the Fidelity Investments 529 College Rewards American Express Card that yields a 2 percent rebate on purchases.

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The Ivy Funds InvestEd Plan consists of a mix of age-based and static investment options. The minimum lump-sum initial contribution is $750 per fund with no limits on subsequent contributions.

For those who prefer to automatically invest in their 529 plan, the minimum initial contribution is $50 per fund with $50 monthly contributions. If funding this investment through payroll deduction or salary deferral, there is no minimum initial contribution set.

Through its three 529 college savings plans, Arizona offers families a variety of options
for funding their children's higher education needs.

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2015-30-18
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