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Grandparents - Information Specifically for You!

Offering a variety of savings strategies, great tax benefits, and other advantages, the College Savings Plans of Maryland make it easier than ever for you to save for college for your grandchildren. As a grandparent, you can be a key part of establishing a savings strategy for your grandchildren early in their lives so that they may reduce or even eliminate their reliance on future loans and grants by the time they reach college age. Help your children save for their children by establishing your own college savings account for your grandchild. Parents, grandparents and others can all save for the same child by establishing multiple accounts in that child's name. For example, a four year University Plan in the Maryland Prepaid College Trust can be divided into multiple account holders - the mother and father each purchase a year of tuition and the grandmother and grandfather also purchase one year each of tuition, thereby bringing the total to four years. Listed below are some distinct benefits of choosing the College Savings Plans of Maryland as your strategy to save for your grandchild's future higher education expenses as well as answers to some commonly asked questions about the Plans.

General Overview of the College Savings Plans of Maryland

The College Savings Plans of Maryland offers two 529 college savings plans from which to choose. The Maryland Prepaid College Trust locks in tomorrow's tuition at today's prices, offers affordable payment options and the security of a Maryland Legislative Guarantee. The Maryland College Investment Plan managed by T. Rowe Price, offers a variety of flexible investment portfolios, flexible contribution amounts, and no sales loads, commissions or enrollment fee. Each Plan that the College Savings Plans of Maryland offers is based on a different savings strategy and offers distinct benefits. The following frequently asked questions will help you to make the decision that's best for you, whether it's one plan or a combination of both.

Frequently Asked Questions

1. What are the tax benefits of the College Savings Plans of Maryland?

The College Savings Plans of Maryland offer hard-to-beat tax benefits. They include:

  • Maryland State Income Deduction - An annual Maryland State income deduction on contributions of up to $2,500 per account or beneficiary, depending on the Plan you choose. This deduction is available to all Maryland taxpayers, even though your grandchildren may live out-of-state or decide to attend an out-of-state college. Only account holders are eligible for the Maryland State income deduction, so establishing your very own account for your grandchild is a strategy to qualify yourself for the deduction.


  • Tax deferred/tax free earnings growth - When funds are distributed for eligible college expenses, they are Maryland State tax free and federally tax free.


  • Gift tax benefits - The annual federal gift tax exclusion is $14,000 for 2015. More specifically:
  • For for the calendar year 2015, 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 $14,000 per year ($28,000 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 2015 of up to $70,000 can be made in a single year ($140,000 for married couples filing jointly) for a Beneficiary and averaged out over five years for purposes of the federal gift tax exclusion.


2. Are the College Savings Plans of Maryland a smart choice for gift giving?

Many grandparents have chosen the College Savings Plans of Maryland as a gift for their grandchildren on a special occasion. Instead of purchasing a savings bond for your grandchild, why not consider an investment in the College Savings Plans of Maryland instead? You can either open your own account to enjoy tax benefits or you can contribute to your grandchild’s existing account by completing and returning the Gift Contribution Slip with a contribution of $25 or more. We also have a Certificate available that can be used to announce the gift to the recipient. Either way, you are helping your grandchildren reach their goal of attending college!

3. Is my grandchild limited on where he/she can use the funds in his/her College Savings Plans of Maryland account(s)?

Save here. Go anywhere - The College Savings Plans of Maryland allows participants to attend nearly any accredited college nationwide - public or private, two-year or four-year. Your grandchild can also use the money at U.S. schools that have campuses outside of the United States. Furthermore, benefits are applicable to trade and technical schools provided that they are federally accredited.

4. What type of flexibility features do the Plans offer?

The Plans allow your grandchildren to choose when and how to use their benefits. Should they want to delay the start of school, there's flexibility as to when they may use the account. And in addition to tuition, we have options you can use to help your grandchildren pay for things like room and board and other eligible expenses - even graduate school.

5. Are the Plans affordable?

Because the College Savings Plans of Maryland offer so many choices, you're sure to find an option that suits your budget. You can start saving for your grandchildren with as little as $25 a month, using automatic monthly contributions in the Maryland College Investment Plan, or purchase as little as a one-semester plan in the Maryland Prepaid College Trust.

6. How do I enroll in the Plans?

Click here for more details and information on how to enroll in the Maryland Prepaid College Trust.

Click here for more details and information on how to enroll in the Maryland College Investment Plan.