Baltimore, MD - Mar. 26, 2017 - Are you interested in saving for college for your child’s tuition? If yes, perhaps a 529 plan contribution may be right for you. While contributions to a 529 plan are not deductible on your 1040, the earnings do grow tax free. When the funds are used for eligible higher education expenses, the distributions are tax free as well.

If you live in Maryland and contribute to one of the two 529 plans run by the State- Maryland Prepaid College Trust or Maryland Investment Plan- your contributions are a subtraction from Maryland Adjusted Gross Income, up to $2500 per child per parent. You can contribute to a plan even if you do not have an account with a plan, but the contributions will not have the income tax benefit.

In addition, individuals who open a new account before June 1st 2017 and make at least the minimum contribution to the account ($250 or monthly automatic contributions of $25), may receive a $250 matching contribution by the State. To be eligible, the beneficiary must be a resident of the State of Maryland, and the account owner’s Maryland Taxable Income must be less than $112,500 (if filing as an individual) or $175,000 (if married filing jointly).

Contact the Maryland College Investment Plan at 1-888-463-4723

Moshe Pelberg is a CPA in private practice in Northwest Baltimore.