Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Delaware 529 Education Savings Plan receives silver rating after program overhaul

State Treasurer Colleen Davis speaks at forum on Delaware EARNS at Police Athletic League of Wilmington
Office of the State Treasurer
State Treasurer Colleen Davis speaks at forum on Delaware EARNS at Police Athletic League of Wilmington

Investment plan rating group Morningstar upgrades Delaware’s 529 Education Savings Plan to a silver status.

The new rating comes after a recent program overhaul that included a 2022 bill passed by state lawmakers improving tax incentives for Delaware 529 contributions.

State Treasurer Colleen Davis says the changes also boosted plan enrollments.

“The fact that we were able to get this deduction done and implemented so quickly, and the way in which we saw just a really big uptick in participation in the plan demonstrated that it was an effective way to entice people to get back in and get active again,” Davis says.

Davis says the program hasn’t gotten much attention in recent years and original plan holders have likely withdrawn most of their education savings.

Now the plan offers withdrawals for qualified higher education expenses like tuition, fees, and books that are federal and Delaware income tax-free. Davis also notes the plan isn’t just for college – the money can be used for trade or technical schools and continuing education.

“It can even be used for professional certifications and recertifications," Davis says. "So if you are a nurse and you need to get continuing education credits and things like that, you can continue to use the money in your 529.”

The 529 can also be turned into an IRA.

“Life is what it is and kids end up doing what they end up doing and finding things that they might love that are different, or they get a full scholarship, or who knows right?" Davis says. "But you are still able to make that investment today and have a true impact on your child’s life whether it’s through education or it could be much further down the road and you may actually be helping them to prepare for retirement.”

Delaware 529 also offers the First State First Step program. Anyone who opens a new plan by the end of the year and deposits $100 for a beneficiary five years or younger gets a $100 match from the state.

Rachel Sawicki was born and raised in Camden, Delaware and attended the Caesar Rodney School District. They graduated from the University of Delaware in 2021 with a double degree in Communications and English and as a leader in the Student Television Network, WVUD and The Review.