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How Does The Arizona 529 Plan Work? 

The Arizona Family College Savings Program is sponsored by the state of Arizona. It offers a variety of investment choices including both FDIC insured CDs and Mutual Funds. Depending on their investment style and risk tolerance parents can opt for one of the two direct-to-consumer programs and one financial advisor-sold program. Parents can begin saving with as little as $15, $25, or $150 a month, depending on the plan provider. All contributions to accounts grow on a tax-deferred basis. The funds can be used at most accredited public or private universities, colleges, and vocational schools in the United States, as well as eligible foreign institutions.  

 

 

According to the Arizona State Treasurer Kimberly Yee, Arizona 529 assets grew by 24.7% to $2.2B. It means there will be more money for students to fund their education.

 

 

In the first 13 months under the leadership of Arizona Treasurer Kimberly Yee, @AZ_529 Education Savings Plan assets grew by 24.7% to $2.02 billion. That means more savings for individuals to pay for their future education! #AZSavesForCollege pic.twitter.com/fTlMsBp5F3

— Office of the Arizona State Treasurer (@AZTreasury) December 2, 2021

 

 

Enrollment Requirement  

There are no income or residency requirements.

 

Educational Programs Funded By Arizona Family College Savings

• K-12 Education - Up to $10,000 on K-12 education at a public, private or religious school.
• Apprenticeship - More and more students are opting for apprenticeships over a four-year college degree. The plan allows a student to pay books, equipment, fees, and supplies for on-the-job training with classroom instruction. The apprenticeship program must be registered with the U.S. Department of Labor.
• Vocational School - Trade schools are popular once again. The plan can be used to pay for a vocational school with a Federal School Code. A future tradesman/woman can pay for all qualified expenses including tuition, fees, housing, meal plans, books, supplies, computer technology, and equipment.
• Graduate and Undergraduate College - The plan can pay for qualified expenses including tuition, fees, housing, meal plans, books, supplies, computer technology, and equipment at any college or university in the U.S. as well as some international schools. 
• Continuing Education - The reality today is that to stay competitive in the job market we have to continue upgrading our skills. That may require us to go back to school to pursue a continuing education program or a degree program. The plan can pay for tuition, fees, housing, meal plans, books, supplies, computer technology, and equipment at a qualified institution. 

 

Qualified Colleges

• University of Arizona
• Arizona State University
• Northern Arizona University
• Embry-Riddle Aeronautical University--Prescott 
• Arizona Christian University
• Other public and private colleges
• Out of state colleges and universities

 

Benefits of Arizona Family College Savings Program

• Tax-Deferred - All earnings on the plan are tax-deferred. The qualified distributions are also exempt from federal taxes if residency requirements are met. In addition to that, a couple can deduct to $4,000 per year tax-free and a divorced or separated parent can deduct up to $2,000 tax-free.
• Arizona Financial Aid - Assets in the fund are not considered when determining Arizona financial aid awards.
• Federal Tax Exemption - All qualified distributions are exempt from federal income tax.
• Arizona State Tax - The qualified distributions are also exempt from Arizona income tax for Arizona taxpayers
• Can be funded by Rolling Over  - The plan can be funded by rolling over another college savings plan.
• Supports in-state and out-of-state schools - You can use your savings for schools that are inside Arizona or in other states.

 

Jenny Rimsza Clark, an Arizonian mother of 5 children has invested in Arizona 529 for all of her kids and she loves the plan.

 

Love our Arizona 529s! Got one for all five kids as soon as we got their social security cards after birth! Highly recommend to our friends to save even a modest portion automatically each month. Easy to setup and fund!

— Jenny Rimsza Clark (@ClarkRimsza) May 30, 2021

 

Criticism for Arizona Family College Savings Program

• Since the plan mainly invests in the stock market, the plan beneficiary may not have enough funds due to the market fluctuations.  
• Plan with CDs may not earn enough interest to pay for school. 
• Some distributions may be taxable.
• It gives an unfair advantage to the rich since they can save faster. 
• Not insured by the Arizona State.

 

Co-parents and Arizona Family College Savings Program

The Arizona 529 plan can be a good option for divorced and separated parents residing in Arizona. However, they should consider exploring some out-of-state programs as well since the tax benefits are not significant and investment options are below industry standards.

 

Since co-parents have separate finances and only one person can start a Arizona Family College Savings plan, both parents can start one separately for the same child, and fund half of the balance.  This way, if the child decides not to attend college or they need to withdraw funds for some other reason, or assign a different beneficiary for their portion, they can do so easily.  Alternately, one parent can fund the entire plan and the other one can reimburse them for their half.  Another option is that they can start 529 plans in different states and fund half each.

 

How to Enroll 

You can enroll by going to the plan website.

 

Comparison With Other 529 Plans

Feature	Arizona	California	Alaska
Max Contribution	$519,000	$529,000	$415,000
Full In-state Tuition	Yes	Yes	Yes
Full Out-of-state Tuition	Yes	Yes	Yes
State Tax Exemption	Yes	Yes	Yes
Federal Tax Exemption	Yes	Yes	Yes
Primary Contributors	Anyone	Anyone	Anyone
Student Loan Repayment Option	Yes	Yes	Yes
Plan Review		Link	Link

Related:

What is a 529 Plan?

 

529 Plans By State

1. Alaska 529 Plan

2. Alabama 529 Plan

3. Arizona 529 Plan

4. Arkansas 529 Plan

5. California 529 Plan

6. Colorado 529 Plan

7. Connecticut 529 Plan

8. Delaware 529 Plan

9. Florida 529 Plan

10. Georgia 529 Plan

11. Hawaii 529 Plan

12. Idaho 529 Plan

13. Illinois 529 Plan

14. Indiana 529 Plan

15. Iowa 529 Plan

16. Kansas 529 Plan

17. Kentucky 529 Plan

18. Louisiana 529 Plan

19. Maine 529 Plan

20. Maryland 529 Plan

21. Massachusetts 529 Plan

22. Michigan 529 Plan

23. Minnesota 529 Plan

24. Mississippi 529 Plan

25. Missouri 529 Plan

26. Montana 529 Plan

27. Nebraska 529 Plan

28. Nevada 529 Plan

29. New Hampshire 529 Plan

30. New Jersey 529 Plan

31. New Mexico 529 Plan

32. New York 529 Plan

33. North Carolina 529 Plan

34. North Dakota 529 Plan

35. Ohio 529 Plan

36. Oklahoma 529 Plan

37. Oregon 529 Plan

38. Pennsylvania 529 Plan

39. Rhode Island 529 Plan

40. South Carolina 529 Plan

41. South Dakota 529 Plan

42. Tennessee 529 Plan

43. Texas 529 Plan

44. Utah 529 Plan

45. Vermont 529 Plan

46. Virginia 529 Plan

47. Washington 529 Plan

48. West Virginia 529 Plan

49. Wisconsin 529 Plan

50. Wyoming 529 Plan

51. DC 529 Plan

Warning:  This post is neither financial, health, legal, or personal advice nor a substitute for the advice offered by a professional. These are serious matters, and the help of a professional is recommended as it can impact your future.