Planning for college can feel like trying to solve a Rubik's Cube blindfolded. Or maybe it’s more like walking backwards up a downward escalator. Regardless, fear not! Michigan's 529 Plan is here to help you save for higher education without pulling out your hair. Let's break it down and see what’s up!
Here are Five Fast Facts on Michigan’s 529 plan:
- ❓ Five Twenty-What? - Think of a 529 Plan as a special piggy bank that grows your money tax free for education. You put money in, it grows over time, and when it's time for college, you smash that bad boy open and send the kiddo off to class!
- 👍 Can I Get Some Of That? - Yes! Pretty much anyone with a Social Security number or taxpayer ID can open a Michigan Education Savings Program (MESP) account. And pretty much anyone can be the beneficiary of the account, too. A recent expansion also includes apprenticeship costs and some loan repayments. As long as you use it for school expenses, you’re good to go!
- ✋ Don’t Limit Me, Bro - The bad news is that there are limits on how much you can dump into 529 plans. The good news is that the limit is a whopping $500k! But remember: there are other tax rules for gifts, so if you have a sugar daddy loading you up, they might still get smacked by the IRS. Though to be fair, if they have that kind of money to gift you, they probably have an army of lawyers and accountants to take care of it.
- 😍 Beautiful Benefits - You don’t get a federal tax break for putting money into a 529, but you do get one from Michigan! You can deduct up to $5k of your contributions ($10k for joint filers) from your income each year. Even better, your investment grows tax free, and withdrawals for covered expenses are tax free, too! It's like having your cake and eating it too!
- 📚 What’s Covered? - If it’s about your education, it’s probably covered. Things like tuition, books, supplies, and even room and board count, as long as you’re at least a half-time student. Some international education is covered, too!
🔥Bottom line: Education is expensive! But with some planning and a proper understanding of the tools available – like Michigan’s 529 plan – you can do it without your head doing its best cue ball impression!
Do you use a 529 plan?
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