The Grandparents' Guide to Maryland 529 Plans

Grandparents dream of seeing their grandchildren succeed, and a college education is a great place to start. Maryland 529 plans provide flexibility—your grandchild can use them both in and out of the state when the time comes.

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Unique Tax Benefits

Did you know you that you may be eligible for federal and State tax benefits when you open or contribute to a Maryland 529 Account?

Any earnings are federally and State tax-free when used to pay for qualified educational expenses. And, if you have Maryland taxable income, you may deduct up to $2,500 per year, per Account or per Beneficiary, depending on the plan you choose, for contributions to a Maryland 529 Account.

Maximizing your State income tax deduction
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Give a Gift

Education is a gift that your grandchild will never outgrow. If your grandchild already has a Maryland Prepaid College Trust or Maryland College Investment Plan Account, it's easy to make a gift contribution to their Account.

Contributing today, could mean less they have to borrow tomorrow.

It’s easy and hassle-free.

You may be eligible for a gift tax exclusion and a Maryland income deduction.

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Open an Account

Help your grandchildren achieve their dreams by helping to fund their future education. Maryland 529 offers two easy and smart ways to save with the Maryland Prepaid College Trust and the Maryland College Investment Plan. Opening your own Account can also ensure that you retain control of the savings and how the Account is used. In addition, you can name an Account Holder Successor to help determine who will assume control of the Account in the future.

Compare the Plans
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Gift Tax and Estate Benefits

A 529 college savings plan allows you to complete a gift for purposes of the federal gift tax exclusion while remaining in control of the assets as the account holder. Contributions may also qualify for special 5-year averaging of the contribution, allowing a larger lump sum to qualify for the gift tax exclusion over that time if the proper election is made.

For example: For the 2022 tax year, if the amounts contributed by you for your beneficiary’s 529 account, together with any other gifts to that person (over and above those made to your account) do not exceed $16,000 ($32,000 for married couples making a proper election), no gift tax will be imposed for the year. Because you are permitted to average your 529 contributions over five years, gifts for a beneficiary of up to $80,000 can be made in 2022 ($160,000 for married couples making a proper election) and averaged out over five years for the gift tax exclusion. The ability to average a $80,000 gift over five years is a benefit that is unique to 529 plans.

This allows you to efficiently move assets over and above the $16,000 gift-tax exclusion limit into a tax-deferred investment.

However, you should read the Federal Tax Considerations in the MPCT Plan Disclosure Statement or MCIP Plan Disclosure Statement for further information for further important information. In addition, you should consider consulting with a tax and estate-planning professional before investing.