Additional Tax Information

Maryland Income Tax Administrative Release No. 32

Please click on the following link for more information about Maryland Income Tax Administrative Release No. 32 which explains the Maryland Prepaid College Trust and the Maryland College Investment Plan Tax Benefits:

http://www.comp.state.md.us/publications/bulletins/it/ar_it32.pdf

Questions About 1099-Q

1) Why am I receiving this form?

Answer:  You received this form because, typically, there was a distribution on your account during the prior calendar year. 

For distributions from either the Maryland Prepaid College Trust or the Maryland College Investment Plan, the IRS requires us to file a Form 1099-Q with the IRS and copy the recipient account holder or beneficiary.  The beneficiary on the account is listed as the recipient of the distribution is made (a) directly to the designated beneficiary, or (b) to an eligible educational institution for the benefit of the beneficiary.  Otherwise, the account holder is listed as the recipient.

The following are examples of distributions reported on Form 1099-Q:

• Distribution for qualified higher education expenses;
• Refund to the account holder; or
• Rollover or direct transfer to another 529 plan. 

2) Must I pay taxes on this distribution?

Answer:

Each taxpayer is responsible for determining whether taxes must be paid on a distribution. You can consult IRS Publication 970 (link below) to view the latest tax changes regarding your distributions. You should consult your tax advisor for the application of the tax laws to your particular situation.

Sources for more detailed information:

• IRS Publication 970
• Maryland Prepaid College Trust Disclosure Statement   
• Maryland College Investment Plan Disclosure Statement