College Savings Bank Transition
Effective Nov. 1, 2021, College Saving Bank will no longer be accepting new accounts or the purchase of new products for the AZ529, Arizona’s Education Savings Plan. Additionally, no deposits to existing accounts will be accepted after Feb. 1, 2022.
Any College Savings Bank CD accounts will be serviced through their full maturity, regardless of the change. All Honors Savings Accounts will continue to be serviced through College Savings Bank until at least November 30, 2022, when they will be transitioned to Fidelity Investments.
For more information from Fidelity Investments about this transition please, click here.
Below is a list of answers to frequently asked questions (“FAQs”) regarding the planned transition of AZ529, Arizona’s Education Savings Plan Bank Plan accounts and assets from College Savings Bank (“CSB”), a Division of NexBank, to Fidelity Investments. The Arizona State Treasurer’s Office (“ASTO”) will be updating this page periodically in response to additional questions received from AZ529 Bank Plan Account Owners and members of the public.
CSB, a Division of NexBank, has been an AZ529 program manager and valued State of Arizona partner since AZ529 was first created and launched in 1999. Arizona state law prohibits any AZ529 program manager’s contract from exceeding a maximum term of seven years. State law further gives the ASTO, as AZ529 Administrator, the authority to enter contracts with selected financial institutions as program managers subject to the approval of the Arizona State Board of Investment (“BOI”) as AZ529’s Trustee. The State of Arizona’s current program manager contract with CSB was initiated on October 24, 2016, for a five-year term ending October 23, 2021. A two-year extension option was available if approved by the BOI. On April 15, 2021, ASTO sent a letter to CSB inviting them to exercise the two-year extension, subject to BOI approval. Following this letter, NexBank, CSB’s parent company, indicated they no longer desire to offer 529 savings products after their current AZ529 contract expires. As a result of NexBank’s decision, on September 28, 2021, the BOI approved and ASTO entered into a transition service agreement with CSB. More details pertaining to this transition agreement and how it affects the AZ529 Bank Plan are addressed in the question responses below.
CSB has updated their Disclosure Statement, “AZ529 Arizona’s Education Savings Plan-Bank Plan Disclosure Statement Amendment Dated August 31, 2022.” This Supplement was mailed to all current AZ529 Bank Plan/CSB Account Owners, accompanied by an official letter from ASTO. To view a copy of the CSB Supplement, please click here. To view a copy of the ASTO letter, please click here.
As of November 1, 2021, the AZ529 Bank Plan will no longer accept new enrollments or contributions to new CD products or Honors Savings accounts.
Until February 1, 2022, the AZ529 Bank Plan will accept new contributions to existing accounts. After February 1, 2022, the AZ529 Bank Plan will no longer accept contributions into existing accounts.
CSB will continue to service all AZ529 Bank Plan CD products through their respective maturity dates. Any CD products that mature between November 1, 2021 and November 30, 2022 will be automatically converted to Honors Savings accounts, unless otherwise directed by the Account Owners. Additional information will be provided to Account Owners prior to the transition to Fidelity Investments.
CSB will service all AZ529 Bank Plan Honors Savings accounts until at least November 30, 2022. At that time, assets will be transitioned to Fidelity Investments. Additional information will be provided to Account Owners prior to the transition.
The State of Arizona, through the BOI, has approved the Fidelity Bank Deposit Portfolio product (which carries FDIC insurance) as the default replacement vehicle for AZ529 Bank Plan Honors Savings account assets that are transferred from CSB. Account Owners will also have the option of: 1) transferring their Honors Savings account assets to another AZ529 product offered by Fidelity Investments, with or without FDIC coverage; or 2) rolling over their Honors Savings account assets to another state’s 529 plan, including plans offering FDIC-insured products.
ASTO is currently in the process of working with both CSB and Fidelity on creating a formal Transition Plan relating to the transfer of AZ529 Bank Plan account assets from CSB to Fidelity. This Transition Plan is due in April 2022 and will establish the procedures by which CSB will transition: 1) management and service of all existing Honors Savings Accounts to Fidelity by the November 30, 2022 transition date; and 2) management and service of products that become Honors Savings Accounts through maturity of a CD product after the November 30, 2022 transition date. Additional information will be provided to Account Owners prior to the transition.
Arizona taxpayers are still eligible to take the Arizona state income tax deduction for any contributions made to their AZ529 Bank Plan.
No. In addition to the Bank Plan, the AZ529, Arizona’s Education Savings Plan also sponsors a 529 Plan offered through Fidelity Investments. For additional information on AZ529, please contact them at az529.gov or call 1.602.542.7529. For additional information on the AZ529 Plan offered by Fidelity Investments, please call 1-800-544-1262 or visit: https://www.fidelity.com/529-plans/arizona. In addition, AZ529 sponsors an advisor-sold 529 Plan offered through Ivy Investments. However, the Ivy InvestEd 529 requires an Account Owner to work through a financial advisor. For additional information on the Ivy InvestEd 529 Plan, please call 1-800-544-1262 or visit: https://www.ivyinvestments.com/ivy-invested-529-plan.
Read a letter from Arizona Treasurer Kimberly Yee.
Read the Supplemental Disclosure from College Savings Bank for the AZ529.