Saving for College the Smart way - 529 Plans          

 

Michigan 529 Plan

Michigan offers two 529 college savings plans, a direct-sold plan called Michigan Education Savings Program and a pre-paid tuition plan called Michigan Education Trust.

Michigan Education Savings Program

Michigan Education Savings Program is a traditional 529 plan that allows you to invest money today and reap tax benefits when you withdraw it to pay for qualified education expenses.

Type:  Direct – this Michigan 529 plan can be purchased directly through the state.

Fund Family:  TIAA-Cref

Minimums:  To get started you can deposit $25 unless you choose to use the automatic payroll deduction method. With this option, you can open an account with $15. Minimum subsequent contributions are $25 and $15 with payroll deduction.

Maximum Contributions:  Currently, you can contribute to your Michigan 529 plan until its balance reaches $235,000.  Of course, your total amount in the plan can be higher as your investments group.  529 plans typically increase the contribution limit over time, so you may be able to contribute more.

Tax Benefits: Good news for Michigan residents - by investing in your state's 529 plan, you can deduct up to $5,000 on your state income taxes for single filer and $10,000 for married filers.  (Amounts transferred from another 529 plan aren't eligible for the deduction.) You also get federal income tax benefits as you do not pay income tax on your earnings.  Out-of-state participants still get the federal tax benefits.

Residency:  Michigan Education Savings Program is open to all United States residents, not just those in Michigan.

You can learn more about this Michigan 529 plan at the official website http://www.misaves.com/.

 

Michigan Education Trust

Michigan also offers a pre-paid tuition plan that lets you lock in today's rates for college.   It can be used at any Michigan public university or college.  However, private college expenses will be prorated and may not be fully covered.

For more information about Michigan Education Trust visit the official website http://www.michigan.gov/setwithmet.

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