Maryland 529 Plan: What College Savers Should Know
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In June 2022, according to the Federal Reserve, Maryland held about $9 billion in 529 accounts. That includes $7.9 billion in 529 college savings accounts and $1.2 billion in prepaid tuition accounts.
529 plans are state-sponsored savings accounts specially designed to save for college. Maryland residents can also take advantage of a tax deduction when they save for college in the state's 529 program.
Keep reading for details about Maryland's 529 program and tax deduction rules for state residents.
Maryland 529 Plans
Maryland offers two 529 plans. One is a college investment plan, meaning that savers put their money in an account that gains and loses with the stock market. The other is a prepaid college trust, where savers lock in today's tuition rates to pay for college years down the line.
Maryland Senator Edward J. Kasemeyer College Investment Plan
- Requires State Residency? No
- K-12 Expenses Eligible? Yes
- Fees: 0.13-0.66%
- Performance Notes: As of January 2023, the 2024 portfolio had gained 6.41% in average annual returns since its creation.
Maryland 529 Senator Edward J. Kasemeyer Prepaid College Trust
- Requires State Residency? Yes
- K-12 Expenses Eligible? No
- Fees: 0%
- Performance Notes: Maryland guarantees that if tuition exceeds the growth of your prepaid fund, the state will fully pay the benefits in the following year.
Maryland's 529 prepaid college trust is designed for Maryland public schools. But, your beneficiary can use the money to pay for tuition at other colleges nationwide.
If your beneficiary gets a scholarship, you can use money from the prepaid trust to pay for other college expenses, like room and board, or hang on to it for grad school.
Maryland 529 Tax Deduction
According to the College Savings Plan Network:
- Single state residents can deduct annual contributions to the Maryland 529 on their taxes — up to $2,500.
- Married state residents who file jointly can deduct up to $5,000.
In Maryland, you can contribute up to $500,000 in total to college savings plans.