Tags: Retirement | Montana | 529 plan | education | saving

Facts about Montana's 529 Plan

By    |   Thursday, 21 May 2015 06:11 PM

People looking to help a Montana resident attend college, trade school, or vocational school can invest in the state's 529 plan, the Montana Family Education Savings Program Investment Plan.

Like 529 plans from other states, income earned from the MFESP Investment Plan is exempt from federal income tax, according to 529.com, a website covering all 529 programs in the United States. Similarly, Montana residents can deduct 529 plan contributions up to $3,000 as an individual and $6,000 for couples filing jointly on their state income tax.

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That amount is significantly lower than what other states provide, however. Missouri residents, for example, can deduct more than twice that amount, according to the Missouri State Treasurer’s Office.

It is possible for people outside of Montana to invest in a MFESP plan and for people in Montana to invest in other states’ plans. State 529 plans “may offer incentives to win your business," according to the Internal Revenue Service. The market is competitive and Montana residents seeking to secure dollars for their education or that of a loved one may want to look around the country.

A fact not very well known about 529 plans is that setting up a plan is possible for more than just the parents of the beneficiary. According to the IRS, grandparents, other relatives, and even friends can set up a 529 plan for someone.

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Montana’s 529 plan offers the ability for others to contribute as they wish. According to Montana Saves, anyone can participate by using the Ugift feature. When provided with the correct code, friends can go online and contribute at any time.

MFESP Investment Plans are capped when the balance reaches $340,000 or the current cost the beneficiary will reasonably incur for qualified higher education, according 529.com. However, if multiple MFESP plans are set up for the same beneficiary, Montana Saves said the balance cap is extended to $374,000.

Combined with the contributions made by the plan’s owner, Montana Saves an added value occurs when the Montana plan is combined with additional contributions made through the UPromise feature. Working with many well-known companies, including Best Buy, Macy’s, Lego, and GameStop, the added contributions can significantly increase the value of the plan’s total. Assuming a four percent return on investment, adding $75 each year for 18 years will add over $1,900 to the plan.

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People looking to help a Montana resident attend college, trade school,or vocational school can invest in the state's 529 plan, the Montana Family Education Savings Program Investment Plan.
Montana, 529 plan, education, saving
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2015-11-21
Thursday, 21 May 2015 06:11 PM
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