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Frequently Asked Questions - About 529 Plans

		What is a 529 Plan? How do 529 plans vary? How does a 529 Plan compare to other investment choices, such as custodial accounts? Does the State of Michigan offer any other education savings programs? What is the Matching Grant Program?

What is a 529 Plan?

529 refers to Section 529 of the Internal Revenue Code. 529 plans are tax-advantaged programs that help families save for college. Residents of any state can invest in any state's 529 Plan, you do not have to be a resident of a particular state to invest in that state's plan. There are three types of 529 plans:

State-sponsored college savings plans. The value of these plans fluctuates with the markets. They can be used at eligible public and private colleges nationally and some colleges abroad. Some state plans offer state tax advantages in addition to federal tax advantages. Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan. Qualified higher education expenses typically include: tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board; and certain expenses for "special needs" students.
State-sponsored prepaid plans. These plans are designed to allow parents to lock in today's tuition rates at eligible public and private colleges or universities. Qualified higher education expenses typically include tuition and fees at in-state colleges and universities. Some have provisions to include room and board.
Independent 529 Plan. A prepaid tuition program designed to provide you with an opportunity to prepay undergraduate tuition for a beneficiary at participating private colleges and universities throughout the United States. By participating in the Independent 529 Plan, you can pay for your beneficiary's tuition and certain fees today and lock in current tuition rates and a discount now for your beneficiary's future enrollment at a Participating Institution. The Independent 529 Plan offers the same federal tax advantages as the 529 savings plans originally specified by the Internal Revenue Code.

With all 529s-both savings, and prepaid programs-there is no income or age limit for participation. You can even open an account for yourself.

How do 529 Plans vary?
529 Plans vary in a number of ways, including contribution limits to the account (defined by the states), fees to open and maintain an account, in-state tax treatments such as a state tax deduction, investment options offered, and the financial services company that manages the plan. There may also be other differences, such as special programs or benefits defined by the particular plan.

Before investing in a 529 plan, you should consider whether the state you or your designated beneficiary reside in or have taxable income in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan.

How does a 529 Plan compare to other investment choices, such as custodial accounts?
To compare features of 529 plans and custodial accounts, use our comparison chart.

Does the State of Michigan offer any other education savings programs?
The Michigan Education Trust (MET) offers prepaid tuition contracts to help families save for college. MET contracts may be used for tuition and mandatory fees. For more information visit the MET website or call toll free at 1-800-MET-4-KID.

Investment management, program administration and distribution of The Michigan Education Trust (MET) program is provided solely by the Michigan Department of Treasury. MET is not managed by TIAA-CREF Tuition Financing, Inc. nor is it distributed by TIAA-CREF Individual & Institutional Services, LLC.

What is the Matching Grant Program?
The State of Michigan may provide a matching grant (the "State Matching Grant") of $1.00 for each $3.00 of contributions made to the MESP account (up to a maximum State Matching Grant of $200 per eligible beneficiary). The State Matching Grant is available only in the first year the beneficiary is enrolled in MESP, and only one account owner per beneficiary may apply for a State Matching Grant on behalf of a beneficiary. The application deadline date is September 30, 2008, or such later date as may be provided by Michigan law. The following criteria must be met when the account is opened:

The beneficiary is 6 years old or younger.
The beneficiary is a resident of Michigan.
The beneficiary resides in a household with a family income of $80,000 or less.
Complete the Application to Receive State Matching Grant (PDF, 128KB) and return to:

Michigan Education Savings Program
P.O. Box 30361
Lansing, MI 48909-7861

Michigan Education Savings Program
30 Dan Road
Canton, MA 02021

Independent contributions by a 501(c)(3) organization that has received the approval of the Michigan Department of Treasury may be made into a Match Account if certain criteria are met. See the MESP Disclosure Booklet and Participation Agreements (PDF, 476KB) for additional information.

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Have a question you don't see listed? Need clarification?

Call us toll-free at
1-877-861-MESP
(1-877-861-6377)

We're available 8:00 am to 8:00 pm Eastern Time.

Don't forget you can set up an Automatic Contribution Plan (PDF, 157KB) or use Payroll Deduction (PDF, 60KB) for your contributions (if offered by your employer).

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Access our glossary for the meanings of terms used throughout this site.

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	Michigan Education Trust

The tax information contained on the Michigan Education Savings Program (MESP) Web site is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer. It was written to support the promotion of the products and services addressed in the Web site. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.

Consider the investment objectives, risks, charges and expenses before investing in the Michigan Education Savings Program. Please call toll-free 1(877) 861-6377 for a Disclosure Booklet containing this information. Read it carefully.

TIAA-CREF Individual & Institutional Services, LLC, distributes MESP. The State of Michigan, its agencies, TIAA-CREF Tuition Financing, Inc., Teachers Insurance and Annuity Association of America and its affiliates do not insure any account or guarantee its principal or investment return except for TIAA-CREF Life Insurance Company's guarantee to MESP under the funding agreement for the Principal Plus Interest Option. Account value will fluctuate based upon a number of factors, including general market conditions.

The MESP Web site contains links to other Web sites. Neither MESP nor TIAA-CREF Tuition Financing, Inc. and its affiliates are responsible for the content of those other Web sites. The accuracy of information on those sites cannot be confirmed.