The Gift That Lasts a Lifetime: Education
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Giving the gift of education can help take a load off of their shoulders. Recently the Wall Street Journal reported that student loan debt has overtaken credit card debt in the U.S. after data reported by FinAid.org and the Federal Reserve. You can be a key part of helping a child establish a savings strategy in order to reduce or even eliminate their reliance on future college loan debt. One way to start saving is by contributing a gift to a 529 Account. Many people have chosen the College Savings Plans of Maryland as a gift for their family and/or friends for the State and Federal tax benefits. You can either open your own account to enjoy the Federal and State tax benefits or you can contribute to an existing account for as little as $25 a month from your bank account.
New to the Plans? What Are the Benefits?
Read more...It’s Never too Early or Too Late to Start SavingFor either Plan, a child can be enrolled from the day of his or her birth. With the
Maryland Prepaid College Trust, a newborn can be enrolled at any time until his or her first birthday even if it is outside the enrollment period. In the
Maryland College Investment Plan, you can even enroll before a child's birth by naming a parent as the beneficiary. Even if you don’t get an early start, any time is a good time to begin saving for college. It’s never too late to contribute to a child’s education.
Flexible and AffordableEach Plan is designed to work based on your needs. Start saving with as little as $25 by making automatic monthly contributions to the Maryland College Investment Plan, or purchase as little as one-semester of a 4-year university plan or 1 year of a Community College plan in the Maryland Prepaid College Trust.
Save Here. Go Anywhere.Both Plans can be used at nearly any college nationwide - public or private, two-year or four-year. The beneficiary can also use the money at certain U.S. schools that have campuses outside of the country. In addition, College Investment Plan accounts can be used at eligible trade and technical schools.
Special Tax Benefits Maryland State Income Deduction - These are the only 529 Plans that offer a Maryland State income deduction on contributions up to $2,500 annually (per account or beneficiary depending on the Plan). This deduction is available to all Maryland taxpayers, even though the beneficiary may live out-of-state or attend an out-of-state college. Only account holders are eligible for the Maryland State income deduction.
Tax deferred/tax free earnings growth - Funds distributed for eligible college expenses are Maryland State tax free and federally tax free.
Gift tax benefits:
For calendar years 2010 and 2011, if the amounts you contribute on behalf of a beneficiary together with any other gifts to that person (over and above those made to your account) do not exceed $13,000 per year ($26,000 for married couples making a proper election), no federal gift tax will be imposed.
Contributions to 529 plans qualify for special 5-year averaging if a proper election is made. This allows you to treat a contribution to either the Maryland Prepaid College Trust, Maryland College Investment Plan, or both as having been made equally over five years. Gifts by an individual tax payer in 2010 and 2011 of up to $65,000 can be made in a single year ($130,000 for married couples filing jointly) for a beneficiary and averaged out over five years for purposes of the federal gift tax exclusion.
Collapse SectionReady to Get Started?
Learn How to Make a Gift Contribution to an Existing Account Click here...If you choose not to open a new account, you may still contribute to an existing account by completing and returning the Gift Contribution Slip with an investment of $25 or more. Keep in mind, you will need the account number from the account holder in order to make the contribution. Also, you can fill out a Certificate that can be used to present the gift to the recipient. There is a selection of Gift Contribution Slips and Certificates for many occassions including birthdays and holidays. Click below to choose your design or to personalize your contribution for a special occassion.
Please keep in mind, if you contribute to an account you do not own, you will have no future control over the use of your contribution and you may forgo state or federal tax benefits for which you might be eligible if you contributed to an account you own.
Gift Contribution SlipGift CertificateCollapse SectionAs a Maryland resident, you can give the gift of education and be eligible to enjoy the federal and Maryland tax benefits that the Plans have to offer. By opening your own account and designating a beneficiary, you can receive a Maryland income deduction of up to $2,500 per year for each account or beneficiary depending on the Plan. This is available to all Maryland taxpayers, even if the beneficiary lives out of state or decides to attend an out-of-state college. Plus, any earnings are Maryland State tax free and federally tax free as long as the money is used for eligible college expenses. College could be a long way off for your aspiring student. What happens if he or she doesn't use the money? Don't worry you have a variety of options. For full details, please read the appropriate section in the Prepaid College Trust or the College Investment Plan disclosure statements or call us at 888.4MD.GRAD (888.463.4723).
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