Maryland 529 College Savings Plan
Maryland 529 College Savings Plan Explained
Maryland offers two unique 529 college savings plans: Maryland Prepaid College Trust and Maryland College Investment Plan. You have the flexibility to choose one or both of these plans when saving for future higher education expenses. With minimum contributions at $25, both of these plans make it easy for families to save for ever rising cost of attending college.
Maryland Prepaid College Trust
In order to participate in the Maryland 529 Prepaid College Trust, the account holder or beneficiary must be a Maryland resident at the time the account is opened. Enrollment is open to newborn children up through 12th grade, though accounts must be opened for at least three years before benefits can be paid. The enrollment period for the prepaid college plan is December 1 through April 2 of each year.
Choosing a Tuition Plan
Under the Maryland Prepaid College Trust Plan, you can select to prepay one semester or up to five years, all of which can be used at community colleges, public, or private universities. Once you select a tuition plan, you can select a payment plan that is flexible to meet the needs of your family. Based on the age of your student, number of semesters you plan to prepay, and the payment terms you select, the flexible payment option makes prepaying college tuition attainable for most families.
There are currently three tuition plan options available:
University Plan: This plan allows you to purchase one semester or up to 5 years at a four year college or university.
Community College Plan: You can purchase up to two years at a community college for your student. If your student chooses to attend a 4 year institution instead, the weighted average of the community colleges will be figured and applied towards their university of choice.
Two-Plus-Two-Plan: This plan allows you to purchase two years of a community college and two years at a four-year college.
You have the flexibility to pay for the pre-paid options by these methods:
- Lump sum, one time payment.
- Annual payments
- 5 year (60 month) payment schedule
- Extended Monthly Payments (Equal payments for a number of months through July 1 of the projected year of your student’s college enrollment.
- Down Payments are allowed in the amount of 25%, 40% or 55% – remaining payments can be established through the aforementioned payment methods.
Maryland College Investment Plan
The second 529 plan option is the Maryland College Investment Plan. Managed by T. Rowe Price, the College Investment Plan gives you a lot of flexibility with respect to investment options. Portfolios can be invested based on age or in a fixed portfolio where you select how aggressive you wish the funds to be invested. Each time you make a contribution, you have the ability to choose a new portfolio.
Enrollment into the College Investment Plan is open to children or adults of any age regardless of state residency. The enrollment period is also yearlong.
The minimum contribution investment is $25 per month through automatic contributions, or a $250 minimal investment by check. The maximums are set at $320,000 per beneficiary.
Maryland 529 Tax Deductions
Maryland taxpayers can receive a tax deduction of up to $2,500 per beneficiary when filing their MD state tax return. If contributions to the College Investment Plan exceed $2,500, the excess may be carried forward as a deduction in future years (up to 10 consecutive years). While the plan is open to receiving contributions from anyone, only the account holder may claim a tax deduction as long as they are a MD resident.
Maryland 529 College Savings Plan: Common Questions (FAQ)
Can a beneficiary have more than one account?
Yes, you can set up multiple accounts for a beneficiary. You cannot, however, have multiple beneficiaries on the same account.
Will my student have to attend a Maryland public university?
No, your savings can be applied to nearly every public, private, 2-year, or 4-year college or university in the United States. The Maryland College Savings Plans can also be used for graduate school, medical school or law school.
Can we still apply for financial aid if we have the Maryland College Savings Plan?
Yes, your participation in the MD 529 plans does not keep you from applying for financial aid or scholarships.
What happens if my student gets a scholarship to cover the expenses of college?
You can still use your savings to pay for other school expenses like books, fees, or any other qualified education expenses. You can also transfer your account to another member in the student’s family.
Can we change the beneficiary on the MD 529 plan?
Yes, you can transfer your account to any other member of the beneficiary’s family.
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