529 Plans: A Better Way to Save for Education
College savings plans, also know as 529 plans, are tax-advantaged investment accounts specifically designed to help families save for qualified education expenses.
LEARNING THE BASICS
What is a 529 plan?
A 529 plan is sponsored by states, state agencies, and educational institutions, and they are authorized by Section 529 of the Internal Revenue Code. These accounts can be opened by almost anyone, there are no income limits, and anyone can contribute.
After opening an account, you can make contributions using after-tax dollars. Investments grow tax-deferred, and earnings are tax-free when used for qualified education expenses.1
The Maryland College Investment Plan is a 529 plan administered by the Maryland State Treasurer.
Explore the Investment PlanNot Just for College: You Have Options
College or University
- 529 funds can be used at any eligible public or private college or university in the U.S. and even some international schools that are eligible to accept U.S. federal student aid.*
- Assets can be used to pay for tuition and fees; room and board; books, supplies, and equipment required for enrollment or attendance; and computer and technology needs.
- Certain expenses for special needs students are covered.
- There are no distribution minimums or maximums.
* For a complete list of eligible institutions, visit https://studentaid.gov/fafsa-app/FSCsearch.
K-12 Tuition
- 529 funds can be used for tuition expenses at K—12 public, private, and religious schools.
- Withdrawal maximum is $10,000 per year, per beneficiary.
- While qualified withdrawals from 529 plans for K—12 tuition expenses are federally tax-free, state tax treatment will vary and could include state income taxes assessed, the recapture of previously deducted amounts from state taxes, and/or state-level penalties.
Graduate School
- All graduate and professional programs are eligible, as long as they are offered by an accredited public or private U.S. college or university. International schools that are eligible to accept U.S. federal student aid would be eligible as well.*
- 529 assets can be used for tuition and fees; room and board; books, supplies, and equipment required for enrollment or attendance; and computer and technology needs.
- Certain expenses for special needs students are covered.
- There are no distribution minimums or maximums.
* For a complete list of eligible institutions, visit https://studentaid.gov/fafsa-app/FSCsearch.
Apprenticeship Program
- Expenses related to apprenticeship programs, such as books, fees, equipment, and other supplies, can be paid for using assets from a 529 plan.
- Programs must be registered with the U.S. Department of Labor.
- There are no distribution minimums or maximums.
Vocational and Trade School
- Accredited vocational schools that qualify for federal financial aid are eligible.*
- Assets can be used to pay for tuition and fees; room and board; books, supplies, and equipment required for enrollment or attendance; and computer and technology needs.
- Certain expenses for special needs students are covered.
- There are no distribution minimums or maximums.
* For a complete list of eligible institutions, visit https://studentaid.gov/fafsa-app/FSCsearch.
Education Loan Repayment
- Assets in a 529 plan can be used to pay the principal or interest on a qualified education loan for the beneficiary.
- There is a $10,000 lifetime maximum for each eligible individual.
Get More From Your Savings
A 529 plan offers the potential of higher returns and tax-advantaged growth compared with lower-yielding bank accounts.2 It’s never too late to start saving for your child’s future education, but the earlier you start, the better. Every contribution can add up. The more you are able to save today means the less you may have to borrow tomorrow.
See Growth PotentialTax Advantages
Distributions used to pay for qualified education expenses are free from federal and state taxes, helping you keep more of your savings. You may also be eligible for a State income subtraction when you contribute to a 529 plan.1
See Tax AdvantagesHOW TO GET STARTED
Crafting your 529 strategy
Saving for your child's future eduction has never been easier.
T. Rowe Price Insights
Develop a Savings Strategy That Will Work Best for You.
Deciding how much to save for your child’s education and when to start saving are important first steps in developing a college savings plan.
OPENING YOUR OWN ACCOUNT
How to Open a Maryland College Investment Plan Account
Opening your own College Investment Plan account can ensure that you retain control of the savings and how the account is used. In addition, you can name an account owner successor to help determine who will assume control of the account in the future. Saving for your child’s future education has never been easier.
Open a College Investment Plan Account
Save for your child's future education today with the Maryland College Investment Plan managed by T. Rowe Price, an investment management firm with more than 80 years experience.
Choose an Investment Option
We offer a variety of investment options whether you are new to investing or prefer a hands-on approach.
Contribute All at Once or Save Regularly
Once you open an account you can tailor your contributions to your current budget. It’s easy to save with one-time contributions or recurring contributions with the option of increasing over time.
Recurring Contributions1 The availability of tax benefits may be conditioned on meeting certain requirements such as residency, purpose for or timing of distributions, or other factors as applicable.
2 Unlike a traditional bank account that offers Federal Deposit Insurance Corporation (FDIC) protection, investments in 529 plans are generally not guaranteed, and you could lose money, including your principal, by investing in them. There may be other material differences between savings accounts and 529 college savings plan accounts that should be considered prior to investing.
