Save for K-12 Education with a Maryland 529 Plan

The College Investment Plan is more flexible than ever. You can now use the money saved in your Account for tuition expenses of up to $10,000 each year at private, public, and religious K-12 schools—giving you more options for your child’s future. Using your MCIP Account to pay for K-12 tuition may be something to consider, especially if you have enough saved to fund both K-12 and college education for your child. Keep in mind, that you can accumulate a maximum Account balance of up to $500,000 per Beneficiary. Since federal expansion of the meaning of Qualified Education Expenses effective January 2018, Account Holders have been permitted to take federally-qualified distributions from their 529 accounts for up to $10,000 per Beneficiary, per year for tuition at an elementary or secondary public, private, or religious school.*

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Save for K–12 Education With a College Investment Plan

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As of January 1, 2018, Qualified Education Expenses include distributions from your Account up to $10,000 per year per Beneficiary across all Accounts to be used for tuition expenses for enrollment or attendance at a K-12 public, private, or religious school. State tax treatment may vary*.

Qualified distributions for K-12 tuition expenses are federally and Maryland State tax-free. If you or your Beneficiary live outside Maryland, you may have to pay state income tax on K-12 distributions, as state tax treatment of these distributions varies*. Consult your tax professional for more information.

As with any 529 distribution, it is the Account Holder’s responsibility to ensure they are keeping adequate records and receipts to furnish the IRS in the event of an audit.

If you are the Account Holder simply log into your Account. You can also call us at 888.4MD.GRAD (463.4723) Option 1, or complete the Distribution Form. Distribution checks for K-12 must be made payable to the Account Holder or the Beneficiary, not the K-12 institution. If you are not a Maryland resident, you should discuss your state’s tax treatment of K-12 distributions with a qualified tax professional.

For K-12 distributions, we will only be able to provide distributions directly to the Account Holder or the Beneficiary, and not to the K-12 institution.

Maryland taxpayers may receive a maximum $2,500 subtraction from their State adjusted gross income annually per Beneficiary for contributions to the Maryland College Investment Plan, regardless of whether the contribution will be put toward qualified K-12 tuition or higher education. If you are the Account Holder or a contributor, you may subtract up to $2,500 of contributions each year from your Maryland State income per Beneficiary - $5,000 for two, $7,500 for three, etc. However, you cannot subtract more than $2,500 per Beneficiary, per year. Contributions totaling more than $2,500 per Beneficiary may be subtracted for up to the next 10 years.

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While distributions from 529 college savings plans for elementary or secondary education tuition expenses are federally and Maryland State tax-free, state tax treatment in other states will vary and could include state income taxes assessed, the recapture of taxes for previously subtracted amounts from state taxable income, and/or state-level penalties. You should consult with a tax or legal professional for additional information.

 

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. Please consult with a tax professional regarding your specific situation.