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Facts About Maine's 529 Plans

By    |   Monday, 18 May 2015 05:21 PM

Many families in Maine are looking to the state's 529 plans as one of the best financial decisions they can make to save for their children's college education. Investing in a 529 plan allows a family to save money throughout their child's life, and when the time comes for that child to attend college, the family can withdraw, on a tax-free basis, all the money they saved and all the investment gains they made as long as that money is put toward schooling.

Although President Barack Obama in January 2015 considered legislation that would tax 529 plans, he quickly backed down from that idea because of outrage. Here are four facts about Maine's 529 plans.

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1. Just like in 33 other states and the District of Columbia, contributions to the Maine 529 plans are tax deductible. According to U.S. News & World Report, the state allows tax deductions annually of up to $250 for single and joint tax returns. Maine is one of only five states that allow for a state income tax break for investing in a different state's 529 plan, according to Forbes.

2. One of Maine's biggest features is the Harold Alfond College Challenge
for babies born in Maine. Alfond – the founder of Dexter Shoes – offered a $500 grant to college for any baby born in Maine as long as the parents filled out the appropriate paperwork during the child's first year of life. The grant was adapted to boost participation. The Bangor Daily News explained: "Because this grant is so generous, so well publicized, and so easy to claim, it's difficult to imagine anyone passing up on it – but many did … That's why they've now changed the grant – retroactive to January 1, 2013 – and are awarding it based on birth records with no paperwork required from the parents."

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3. For those not eligible for the Alfond challenge, the state provides a $200 matching grant for 529 accounts opened for the benefit of children with ties to Maine. This could include an out-of-state child whose grandparents live in Maine, for example.

4. Maine offers advisor-sold and direct-sold plans.
Advisor-sold plans under $20,000 include a $50 annual charge, but that fee is waived if the donor or beneficiary is a resident of the state or contributes at least $2,500 per year. For the direct-sold plans, the most a donor should have to pay in fees is 0.71 percent of the portfolio. Neither the advisor-sold nor the direct-sold plans have an enrollment or application fee. The maximum contribution limit for any Maine plan is $380,000 total.

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Many families in Maine are looking to the state's 529 plans as one of the best financial decisions they can make to save for their children's college education.
529 plan, facts, Maine
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2015-21-18
Monday, 18 May 2015 05:21 PM
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