Maryland 529 Plan Rules And College Savings Options
Maryland has a 529 plan called Maryland 529 that can help you save for college. Maryland also has a 529 Able Plan as well.
If you live in Maryland, these might be good options for you to save for college.
These programs are designed to help make college more affordable - so that you can get the education you need. By saving for college early on, you can make paying for college easier down the road.
If you're not quite sure how 529 plans work, check out this starter guide to What Is a 529 Plan?
There is also a specific order of operations to save for college that we recommend families follow. These programs are specific to the State of Maryland. Each state has different rules when it comes to 529 plan savings. Here are the Maryland 529 plan rules.
Average Cost Of College In Maryland
When saving for college in Maryland, it's important to take into consideration the cost of attendance in the state. If you choose to go to an out-of-state school, you need to look at the average cost of attendance in that state.
There are 78 colleges and universities in the State of Maryland.
The total average cost of college (Cost of Attendance) in Maryland for in-state residents is $22,644 for 2023. This includes tuition, room and board, books and supplies, and other expenses.
For just tuition alone, the average undergraduate tuition for in-state residents is $8,637 for 2023. The cost of tuition in Maryland has been rising at about 6% per year.
See how this compares to the average cost of college here. Keep in mind the average student loan debt by graduating class here.
Explore the data here.
Maryland 529 Plan Tax Information
Tax savings is one of the big benefits of using a 529 plan to save for college. On a federal-level, there is no tax savings for contributions, but qualified distributions are tax-free.
Here are the special tax benefits and considerations for using a 529 plan in Maryland.
Contributions
Maryland offers a state tax deduction for contributions to a 529 plan of up to $2,500 for single filers and $5,000 for married filing jointly tax filers.
You can also carry-forward excess contributions for 10 years, which allows for super-funding.
Minimum: $25
Maximum: Accepts contributions until all account balances for the same beneficiary reach $500,000.
Matching Contributions: Eligible participants who open a new account can receive up to $500 in matching contributions from the state.
Rollovers
Rollovers into the state plan are allowed. Maryland follows federal tax treatment of rollovers.
Qualified Distributions
Qualified distributions from a Maryland and non-Maryland are tax-free.
K-12 Education
Maryland does conform with Federal law in regard to using a 529 plan for K-12 tuition. See this guide: Using a 529 Plan For Elementary and High School Private Education.
Student Loans
Maryland does conform with Federal law for using a 529 plan for student loans.
Rollover To Roth IRA
Maryland does allow the rollover to a Roth IRA up to $35,000. Learn more about the 529 plan to Roth IRA rollover here.
Non-Qualified Distributions Taxes, Penalties, Recapture
A non-qualified withdrawal from a Maryland 529 is subject to recapture of previous tax deductions. Rollovers are exempt from recapture.
Maryland 529 College Savings Plan Options
Maryland has several 529 plan options - one consumer plan and one pre-paid tuition program.
Maryland 529 Plan
Maryland 529 is the name of Maryland 529 Plan. This plan offers a variety of investment options, including age-based portfolios that become more conservative as the child approaches college, and static investment fund options.
The funds offered are from T. Rowe Price..
Fees:
There is a program management fee of 0.05%.
The underlying funds all charge expense ratios from 0.21% to 0.65% depending on the investment option.
Who Should Use It:
We recommend that Maryland residents use the Maryland 529 plan due to the tax benefits, low fees, and plan investment options.
We recommend that out-of-state residents utilize other plans.
Maryland 529 Prepaid College Trust
In 2023, the Maryland 529 Prepaid Plan came under fire for various issues related to accounting. As a result, the plan has been closed to new investors, and existing investors are currently stuck in limbo. You can read more about the issue here.
Maryland 529 Able Plan Options
529A Able accounts are accounts designed to help those with disabilities escape poverty and save for themselves. Learn more about 529A Able Plans here.
Maryland ABLE
The Maryland ABLE is a 529A plan open to all residents in Maryland.
This plan allows contributions of up to $18,000 per year from all sources.
It does have a minimum initial contribution amount of $25 per account. The minimum subsequent contribution amount is $10.
The plan does have an account maintenance fee of $35 annually. It also has a program management fee of 0.30%.
You can open an Maryland ABLE here.
Other Programs To Save For College
A 529 plan is one way to save for college. Remember, we have a full guide on our approach to college savings here - and it helps you find other options.
If you're looking for ways to boost your college savings, check this out:
Backer
Backer is one of our favorite ways to save for college because they make gifting for college so easy. You can setup an account, link your 529 plan (in most states), and get a unique URL that you can share with friends and family to save for your children's college.
Plus, they have Backer Bucks, which allow you to earn rewards and rebates for the shopping you already do - directly deposited into your children's 529 plan.
Upromise
Upromise is another awesome tool to help you save for college because they have a lot of ways that you can earn money for your 529 plan. You can get rebates and rewards, and you can get cash back into your child's 529 plan by using the Upromise credit card.
Maryland Financial Aid
Using a 529 plan isn't the only way to save money for college. Each state typically offers a variety of financial aid programs for their residents. These include scholarships and grants, and sometimes unique forgivable student loan opportunities.
Check out the list of Maryland Student Loan and Financial Aid Programs.
Return to the full list of 529 Plans By State.
Editor: Clint Proctor Reviewed by: Mark Kantrowitz
