Maryland 529 – Save4College State Contribution Program

Starting in 2017 if you open a NEW Maryland College Investment Plan you may qualify for a $250 matching contribution from the state.  You must apply for the State Contribution Program when you open the account, and be approved, to get the $250 contribution.

Good Deal alert 

If you, and your future college student are both Maryland Residents, if you don’t already have a Maryland College Investment Plan account open, and if you otherwise qualify for the program, then the Save4College State Contribution Program may be worth considering.

What’s the catch?

Yes, there is one.  You do have to forgo the Maryland deduction of up to $2,500 per beneficiary in any tax year that you receive a $250 state contribution.

So is the trade off, giving up the deduction to get the $250 state contribution, worth it?

If you can qualify it seems that it is.  For example, If you put in the maximum deductible amount each year, $2,500, a Maryland resident can take an income subtraction of $2,500 on their state return.  At Maryland’s top tax rate of about 8% the subtraction is worth about $200 per year in tax savings, versus a $250 state contribution.

How Does It Work?

According to Maryland 529, To be eligible, an applicant must meet the following requirements:

  • The beneficiary must be a Maryland resident
  • Your Maryland Taxable income cannot exceed $112,500 as an individual or $175,000 as a couple.
  • You must open a Maryland College Investment Plan and submit your application for the Save4College State Contribution Program and file and application before June 1, 2017.

Once approved, you must make a minimum contribution to the plan in an amount based on your taxable income.  The minimum contribution is due between July 1 – Nov 1, 2017, the $250 State Contribution will be made by December 31, 2017.

Maryland Taxable Income
Individuals Joint Minimum Contribution State Contribution
$49,999 or less $74,999 or less $25 $250
$50,000 to $87,499 $75,000 – $124,999 $100 $250
$87,500 – $112,500 $125,000 – $175,000 $250 $250

If you only expect to contribute a modest amount into the plan, then the $250 state contribution will likely hold considerably more value than the subtraction deduction will for you anyway.

The deadline to apply for the Maryland State Contribution is June 1, 2017.  Contributions are not guaranteed to all who apply.  They will be awarded on a first come first serve basis to approved applicants until the allocated funds are used up.

For more information about the plan and to apply visit the Maryland529 website https://maryland529.com/MDMatch250