EASTON — Easton YMCA campers gathered around Comptroller Peter Franchot on Wednesday afternoon, Aug. 14, to learn about Maryland 529, a college savings plan.
A 529 plan is a tax-advantaged savings plan designed to encourage saving for the future higher education expenses of a beneficiary, according to the company’s website.
“I’m very happy to be here, because I think I’m looking right at the future of the state of Maryland,” Franchot said.
Franchot’s visit was one among several stops at nearby businesses to promote shopping during the annual Shop Maryland Tax-Free Week.
The tax-free week began Sunday, Aug. 11, and runs through Saturday, Aug. 17. During that time, any single qualifying article of clothing or footwear priced $100 or less — regardless of how many items are purchased at the same time — will be exempt from the state’s 6% sales tax. The first $40 of any backpack or bookbag purchase also is tax-free.
“My office is proud to offer a subtraction in Maryland income tax returns for every payment made through 529 savings,” Franchot said. “I happen to be a big fan of this because it is an investment in your guys’ future.”
“It’s going to be quick Jack-jumps-over-a-candlestick and all of a sudden you guys are old enough to go to college and they’re (the parents) going to have to be figuring out how in a blink of an eye to develop the funds to pay for college,” he said. “They need to start now.”
“For the parents here, it’s difficult to imagine these kids move from kindergarten all the way through college, but that is going to happen in the blink of an eye,” Franchot said.
The comptroller said he has two Maryland 529 funds for his young grandchildren, with the funds to multiply over the next 18 years through compound interest.
Then Maryland 529 Executive Director/CEO Stephen McGowan spoke to share more information about the company.
The nonprofit state agency has two plans: the Maryland Senator Edward J. Kasemeyer College Investment Plan and the Maryland Senator Edward J. Kasemeyer Prepaid College Trust.
Investment plans allow you to invest in a variety of investment options (or portfolios), which typically include varying combinations of mutual funds. You can decide how much you want to invest or contribute, how often and in what type of portfolio. Savings in this type of 529 plan can be used for a variety of education expenses, including tuition, fees, room and board, course-specific fees, books and other supplies, according to Maryland 529’s website.
Prepaid tuition plans are 529 plans that allow for the pre-purchase of tuition based on a current price. One of the main benefits of 529 prepaid tuition plans is they allow you to hedge against future tuition increases. These accounts are designed primarily to be used toward tuition and mandatory fees.
In Maryland, the Prepaid College Trust generally is designed to cover tuition and mandatory fees at a Maryland public college, but accounts also can be applied toward private or out-of-state colleges. However, other states may a have different structure for their prepaid tuition plans, according to Maryland 529’s website.
There also is a Save4College State Contribution Program designed to help lower to middle-income families in Maryland save money for higher education. Your savings can be used at nearly any public, private or technical college nationwide (and even international universities that have a federal school code) for qualified eligible expenses such as tuition, fees, room and board.
The Save4College 2020 application period will open on Jan. 1, 2020.
For more information, visit Maryland529.com.