Now that the future is here, learn how to start using your 529 College Savings Plan.
You’ve planned ahead, helped them cram and crossed your fingers that the big envelope would arrive. And now that it has, you’re ready to start using your Maryland Prepaid College Trust benefits or taking a distribution from your Maryland College Investment Plan! Using your plan is just as simple as it was to start it. Just choose your plan to find out how:
Maryland Prepaid College Trust Maryland College Investment Plan
These frequently asked questions should be read in conjunction with and are limited by the full Enrollment Kit. Many terms used in this section are defined in the Enrollment Kit.
Maryland Prepaid College Trust
When your student is ready to head off to college, you can request benefits from your Prepaid College Trust account just by completing and submitting a Benefits Claim Form. Remember, before completing the Benefits Claim Form, be sure to read the important instructions on page 2 of the form, along with –the Benefits section of the current Contract.
Still uncertain about how to request benefits? Below are answers to several Frequently Asked Questions that can help!
Submitting Your Claim / Processing Your Claim / Amount of Tuition Benefits / Where Can I Use Benefits / Tax Reporting / General Questions
Submitting Your Claim:
How do I claim benefits from my Prepaid College Trust account?
Claiming your benefits is simple! Just complete and sign a Benefits Claim Form and return it to our office, along with an invoice from the college detailing the tuition and fee charges for your student. Don’t forget to include any other required documentation, as listed on your Benefits Claim Form.
How do I submit my completed Benefits Claim Form?
We offer a number of different ways to submit your Benefits Claim Form and required documentation. Just choose the method that works best for you:
- Scan and email your documents to firstname.lastname@example.org. You’ll get an automated reply message to let you know we’ve received your email.
- Fax your documents to (410) 333-2295. Be sure to note on the cover page if you’d like us to call the account holder, or an individual with rights to information on the account to confirm that we’ve received the fax, along with the best phone number for us to call. Requests for information from individuals other than those noted above will not be confirmed.
- Mail your documents to our office at 217 E. Redwood St., Suite 1350, Baltimore, MD 21202.
How do I get an invoice from my student’s college to include with my Benefits Claim Form?
Chances are, this document is just a click away! Nearly all college students are able to access their invoice through their college’s website using the same portal they use to register for classes and view their grades. Typically, students can retrieve their invoice as soon as they complete their registration. Alternatively, some colleges allow students to designate other individuals – such as their parents – as authorized users on their account. In this case, the authorized user would simply log into their student’s account to access the invoice. If you need further assistance getting a hold of this document, please contact your student’s college.
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Processing Your Claim:
When will my claim be processed?
We do our best to give you access to your benefits as quickly as possible. Currently, our office needs at least 10 business days to process a completed Benefits Claim Form.
What happens if my Benefits Claim Form is not completed correctly or is missing documentation?
If you send in an incorrect or incomplete Benefits Claim Form, no worries! We’ll return the form, along with any attachments to the account holder by U.S. mail, and indicate why your form was unable to be processed. The account holder is then responsible for re-submitting the corrected or completed Benefits Claim Form and any required attachments. Once we receive your revised request, our office needs at least 10 business days to process your documents.
How can I confirm that the Prepaid College Trust has processed my benefits payment?
After we’ve processed your documents, you can check your benefits payment information in just three clicks:
Additionally, a written confirmation of this payment will be mailed to the account holder at the address of record via first-class U.S. mail.
How are checks mailed?
Once your documents are processed, we’ll mail out your benefits check as quickly as possible! Checks payable to an account holder or student will be mailed to his or her address of record. Checks payable to your student’s college will be mailed directly to the school. To change an address of record, simply log into your account or send us a signed letter accompanied by a medallion signature guarantee.
Why does the Prepaid College Trust mail checks for benefits? Isn’t it easier and faster to send my benefits by electronic funds transfer?
Great question! While it would definitely be easier and faster for us to send funds electronically, mailing checks for benefit payments is currently the quickest and most accurate way to have a student’s account credited. However, we’re always monitoring trends and enhancements of colleges’ payment processing systems, and plan to transition to electronic payments once colleges are better able to accommodate them.
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Amount of Tuition Benefits:
What will the Prepaid College Trust pay when my student attends college?
For a beneficiary enrolled as a full-time student, we will pay benefits based on the plan you purchased. Just find your plan below to review the ins and outs:
- If your student attends a Maryland public 4-year college, we will pay the full in-state tuition and mandatory fees for up to 15 credit hours each semester at that college, or your minimum benefit, whichever is greater.
- If your student attends a 4-year eligible institution that is a private or out-of-state college, we will pay the actual tuition each semester (or the equivalent) up to one half of the weighted average tuition for the University Plan, or your minimum benefit, whichever is greater.
- If your student attends a 2-year community college (either in Maryland or out-of-state), have a look at the next FAQ to find more information.
Community College Plan:
- If your student attends a Maryland public 2-year community college, we will pay the full in-county tuition and mandatory fees for up to 15 credit hours each semester at that college, or your minimum benefit, whichever is greater.
- If your student attends an eligible institution that is a Maryland public 4-year college or a private or out-of-state 2-year or 4-year college, we will pay the actual tuition each semester (or the equivalent) up to one half of the weighted average tuition for the community college plan, or your minimum benefit, whichever is greater.
I purchased a university plan and my student has decided to attend a Maryland community college. What will my benefit be?
Your student’s plans can change, that’s why your Prepaid College Trust can too! In this situation, your first step is to decide whether you’d like to use your University Plan toward the community college tuition, or convert your university plan to a community college plan.
If you decide to use your university plan toward the community college tuition, we will pay the tuition up to the greater of the weighted average tuition of the university plan or your minimum benefit. If tuition were less than the weighted average tuition, you would have remaining benefits available to apply toward future tuition.
For example, assume the weighted average tuition for the university plan is $9,000 for the academic year or $4,500 per semester. Assume also that the tuition at your student’s community college is $1,800 per semester. We would pay the $1,800 for the semester and you would have used 40% of your benefit for that semester ($1,800/$4,500). You would then have 60% of your benefit for that semester remaining, plus the full second semester that you could use toward future tuition.
If you decide to convert your university plan to community college plan, just complete the Change of Tuition Plan/Payment Option Form. Don’t forget that you have to convert your plan before claiming any benefits on the account (see the Benefits section of your contract).
Is there a minimum number of credits that my student must take in a semester in order for me to use my Prepaid College Trust Account?
In college, every credit counts, and the same can be said about your Prepaid College Trust. To receive benefits other than unused benefits, your student has to be enrolled at least half-time. Half-time is defined as at least one-half of the minimum number of credits necessary to be considered a full-time student by the college. Typically, 6 credits is the minimum number of credits to be considered a half-time student, but this is determined by the college and not by the Prepaid College Trust.
If your beneficiary attends a Maryland public college, private college or out-of-state college as a half-time student, we will pay one-half of the benefit for a full-time student per semester (See: What will the Prepaid College Trust pay when my student attends college?).
If the Prepaid College Trust pays one-half of your benefit for a semester, the other half can be used for that same semester if you provide us with a revised Benefits Claim Form and an updated invoice documenting your beneficiary’s enrollment as a full-time student. Should your beneficiary choose to remain a half-time student, the other half of your semester benefit will be considered a delayed benefit, and may be applied toward future tuition.
Can I use benefits for summer or winter term courses?
Summer and winter are a great time to get ahead, and if you have delayed benefits in your account, your beneficiary can absolutely apply them to summer or winter term courses, just as long as they’re enrolled as at least a half-time student.
What is Weighted Average Tuition?
The weighted average tuition is just that, an average tuition for a Maryland student at an institution of higher education. The equation works like this: first, the Board takes the in-state or in-county tuition at each Maryland public college and multiplies it by the number of full-time in-state or in-county students enrolled at that college. Next, they add all of those products together. This total is then divided by the number of full-time in-state or in-county students enrolled at all Maryland public colleges, and that’s how you get weighted average tuition.
Note that there is a separate calculation for the 4-year public colleges and the 2-year public community colleges in Maryland, and that the Board calculates the weighted average tuition once each year, typically in the fall for the following year, by applying its projected increase for tuition and mandatory fees.
What is the Weighted Average Tuition for the 2017-2018 academic year?
The weighted average tuition for the 2017-2018 academic year is $10,033 for the University Plan and $4,666 for the Community College Plan.
Is there a minimum amount the Prepaid College Trust will pay?
Yes, but the minimum amount is a little different for everyone, and depends on the amount you pay in to your account. See, your minimum benefit is simply the payments you make, plus a reasonable rate of return. This rate is equal to a monthly rate of return of a U.S. Government Security with a constant maturity of one year minus 1.2%, but never less than zero.
If tuition is less than your minimum benefit, you can use the difference for other qualified education expenses like books or room and board.
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Where Can I Use Benefits:
Can I use my Prepaid College Trust Account if my student decides to attend a private or out-of-state college?
As long as the college is an eligible institution, meaning that it meets the definition of eligible educational institution as defined by the IRS, you can absolutely use your account to fund your student’s private or out-of-state education! You can usually find out if a school is an eligible educational institution by searching for its Federal School Code at www.fafsa.ed.gov.
Can I use my Prepaid College Trust Account if my student decides to attend a trade or technical school?
While being certified in a trade or technical program is a great way to kick off a successful career, the tuition needed to attend these types of institutions cannot be funded by benefits from your Prepaid College Trust account.
However, if your student chooses to attend a trade or technical school that meets the definition of an eligible educational institution, you may want to consider rolling over the funds in your Prepaid College Trust account to a College Investment Plan. For more information about this plan, contact a representative at 1-888-4MD-GRAD (463-4732), select option 2, then option 1.
How can I use my Prepaid College Trust account if my student chooses to study outside of the U.S.?
Studying abroad is an incredible way for your student to expand his or her knowledge! As long as your student chooses to study internationally through a U.S.-based college that is an eligible institution, and that college is invoicing you for tuition, then we will pay your benefit just as if your student was studying right here in the United States! However, if your student chooses to study abroad through a U.S.-based college, but the college arranges for another company to invoice you for tuition, then we will be unable to pay your benefit, since that company is not an eligible educational institution.
In addition, some universities located outside of the U.S. have received U.S. accreditation, meaning you can use your benefits to cover your student’s expenses at these institutions as well. You can usually find out if an overseas school has U.S. accreditation by searching for its federal school code at www.fafsa.ed.gov.
What is considered a Maryland Public College?
The following are the eligible Maryland Public Colleges and Universities that are paid as part of in the Prepaid College Trust in-state Tuition benefit:
What if a Maryland public college does not offer the major or program that my student wishes to study?
Maryland participates in a program called the Academic Common Market, in which, under certain conditions, a student may qualify for in-state tuition for select programs at out-of-state public colleges. You can learn more about this program here: http://www.mhec.state.md.us/highered/acadaff/academiccommonmarket/commonmarket.asp
Whether or not your student qualifies for in-state tuition at an out-of-state college through the Academic Common Market, we will still pay benefits based on your student’s attendance at an out-of-state college.
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What kind of tax form will I receive for my claimed benefits?
When you start using your benefits, you’ll have to start reporting them on your taxes. Before January 31st, you’ll get an IRS Form 1099-Q that combines all of your claimed benefits from the prior calendar year.
The student’s Social Security Number (SSN) will be used in tax reporting for payments made directly to the college. In cases where the benefits were payable to the account holder or a leasing company, the account holder’s SSN will be used.
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What if my beneficiary delays college attendance?
Your beneficiary has up to 10 years after his or her projected year of college enrollment to begin to use benefits. Plus, any years spent in active U.S. military service are added to the 10-year limit. If you wish to delay your benefits, there’s no action to take.
What if my beneficiary does not choose to pursue higher education?
If your beneficiary decides further education is not in their future, you still have several options for your account:
Remember, if all benefits have not been used within the designated time period, your account will be terminated. Read Payments to Eligible Institutions in your contract to find out more.
How can I obtain a Benefits Claim Form if I am unable to print it from the website?
We’ll happily send the form to you via U.S. mail. Just contact our office by emailing email@example.com, or calling 1-888-4MD-GRAD (463-4723) and selecting option 1, then option 2.
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Maryland College Investment Plan
You can request a distribution from your Maryland College Investment Plan account simply by logging into your account. You can also call 1-888-4MD-GRAD (463.4723) or complete and submit a Distribution Request Form. For more information about distributions, review the Distributions from Your Account section in your College Investment Plan Disclosure Statement.
Have other questions? Get answers when you review the below FAQs.
Requesting a Distribution / Eligible Expenses and Institutions / Tax Reporting / General Questions
Requesting a Distribution:
How can I receive a distribution?
You get to choose how you’d like to receive your distribution. If you’d like it by check, we’ll mail it to you 1-2 days after your transaction is processed. If you’d prefer an electronic deposit, we’ll place the funds directly into your or the student’s on-file bank account in one of the following ways (your choice):
- Automated Clearing House (ACH): Generally received 2-3 business days after your distribution is processed.
- Wire transfer: Generally received 24-48 hours after your distribution is processed. Please note that your bank may charge you a fee to accept a wire transfer.
If I request a distribution by check, who can I have the check made payable to?
Distributions by check can be made payable to one or more of the following payees:
- account holder
- eligible educational institution for the benefit of the beneficiary
- beneficiary and eligible educational institution jointly
- estate of beneficiary
Do I have to send documentation of qualified education expenses to the College Investment Plan?
No. The account holder is responsible for satisfying the IRS requirements for proof of qualified distributions. So make sure you hang on to any paperwork or receipts needed to verify the type of distribution you receive.
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Eligible Expenses and Institutions:
What are Qualified Education Expenses?
Qualified education expenses are pretty much all the things you need to successfully attend an institution of higher education. These expenses are defined by the IRS and typically include the following:
- Tuition, fees, and the costs of textbooks, supplies and equipment required for enrollment or attendance of a student at an eligible educational institution.
- Certain costs of room and board of a student for any academic period, during which the student is enrolled at least half-time at an eligible educational institution.
- Expenses for “special needs” students that are necessary in connection with their enrollment or attendance at an eligible educational institution.
Remember that student loan expenses are not considered by the IRS to be qualified education expenses.
What is an Eligible Educational Institution?
An eligible educational institution generally refers to a school that is an accredited post-secondary educational institution or vocational school that offers credit toward a bachelor’s, associate’s, graduate or professional degree, or another recognized post-secondary credential. The institution also has to be eligible to participate in a federal student financial aid program.
You can usually find out if a school is an eligible educational institution by searching for its federal school code at www.fafsa.ed.gov.
Can I use my College Investment Plan for trade or technical schools?
Yes. As long as the school meets the requirements of an eligible educational institution, you can use distributions from your College Investment Plan for all your student’s qualified education expenses.
Can I use my College Investment Plan for study abroad expenses?
If your student studies abroad, you may be able to use your account just as you would for schools in the U.S. As long as your student chooses to study through a U.S.-based institution that is an eligible educational institution, and that institution invoices you for a qualified education expense, then you can use your account to fund your student’s education abroad.
In addition, some universities located outside of the U.S. have received U.S. accreditation, meaning you can use your distributions to cover those qualified education expenses as well. You can usually find out if an overseas school has U.S. accreditation by searching for its federal school code at www.fafsa.ed.gov.
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What kind of tax form will I receive for my distribution?
Maryland 529 will generate an IRS Form 1099-Q that reports the distribution and the recipient.
The Beneficiary’s Social Security number (SSN) will be used for tax reporting unless the check is payable to the Account Holder, in which case the Account Holder’s SSN will be used. However, the Form 1099-Q does not report whether the distribution is a Qualified Distribution or a Non-Qualified Distribution. The Account Holder is responsible for making that determination and retaining records to support the type of distribution that was taken.
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Can I take a distribution for expenses already paid?
There is limited guidance provided by the IRS regarding the timing of distributions pertaining to qualified expenses. You may wish to speak with a tax advisor regarding your particular situation.
How long does money have to be invested before I can take a distribution?
You can take a distribution from your account any time you like. Just remember that when you make a contribution to your account, that amount may be held for up to 10 days before it can be distributed.
How much money can I take out? Is there a minimum that I have to keep in the account?
We want you to take your distribution when you need it, so, you can take out as much as you like, with no minimum balance.
How often can I take a distribution? Can I take my money out before the year associated with my Enrollment-Based Portfolio?
There’s usually no limit on how often you can take a distribution, and distributions can be taken at nearly any time, regardless of the year associated with your enrollment-based portfolio.
When will my distribution be processed?
We do our best give you access to your distribution as quickly as possible, so, complete and correct Distribution Request Forms are usually processed within 1-2 business days.
How can I confirm that my distribution was made?
After we’ve processed your documents, you can check your distribution information in just three clicks:
Additionally, a written confirmation of each distribution will be mailed to the account holder at the address of record via first-class U.S. mail.
Will my automatic monthly contributions (AMC) or payroll deductions end if I take a distribution?
Your AMC or payroll deductions will continue until you let us or your payroll department know you’d like them to stop. To modify or cancel your AMC, call us at 1-888-4MD-GRAD (463.4723) or log into your online account. To modify or cancel payroll deductions, please contact your payroll department.
What if my beneficiary does not choose to pursue higher education?
If your beneficiary decides further education is not his or her ideal path, you still have several options for your College Investment Plan:
- Keep your account, since your beneficiary may choose to attend college or an eligible trade or technical school at a later date.
- Name a new beneficiary for your account. Learn more about this in your Plan Disclosure Statement, as certain transfers can be made to a qualified family member without incurring income tax consequences.
- Take a distribution of all or part of your account assets, but remember that the IRS may treat your refund as a non-qualified distribution, making it subject to applicable taxes and penalties.
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