FAME
Carlos Mello, CEO of FAME
May 25, 2023
Commentary: May is a good time to think about a 529 college savings plan
By Carlos R. Mello, FAME
Carlos R. Mello is CEO of the Finance Authority of Maine
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May is designated as 529 Month to encourage families to start saving and preparing for higher education and other costs early. The 529 plans, named for the section of the Internal Revenue Code authorizing them, are education savings plans sponsored by a state that can be used for various eligible education expenses. These plans are tax-advantaged, and money contributed to them can be invested to allow for potential growth over time.
The Finance Authority of Maine (FAME) is proud to administer Maine’s 529 plan, NextGen 529, providing an opportunity for investors, including Maine residents, to save for eligible education expenses while realizing potential tax advantages. It is one of the largest 529 plans in the nation and was recently recognized by Money.com as one of the best in the nation. NextGen 529 offers a wide array of investment choices for both self-directed and advisor-assisted investors.
Saving for college is important year-round, but May is an especially good time to inform and remind parents, grandparents, relatives, and even family friends that a 529 plan is one of the easiest ways to save for higher education. Higher education can lead to a better job and better pay. You can give your child more options when it is time for higher education by planning for future education expenses. To explore savings options and learn more about the details of 529 plans, visit FAME’s College Savings Guide at NextGenforME.com.
With 529 plans like NextGen 529, earnings have the opportunity to grow and withdrawals are federal and Maine state income tax-free when used for qualified education expenses. Accounts can be set up for any child or grandchild, friend or relative regardless of income, residency, or the age of the beneficiary. A 529 plan can be used to pay for all kinds of education — four-year college, two-year associate degree programs, trade schools, apprenticeship programs, even qualified online courses — at home or abroad. In addition, 529 plans can be used to pay for K-12 tuition. And, new for 2023, contributions to any 529 plan, up to $1,000 per student may be eligible for a Maine state income tax deduction.
Additionally, FAME provides a $100 Initial Matching Grant to eligible Maine NextGen 529 accounts upon opening. We also provide a one-time $100 grant to eligible Maine NextGen 529 beneficiaries with qualifying automatic contributions made directly from a bank account or via payroll deduction. Further, if you make contributions to your account, you can get a 30% NextStep Matching Grant up to a $300 match per year.
Thanks to the generosity of the late Maine philanthropist, Harold Alfond, and our partnership with the Alfond Scholarship Foundation, 100% of children born as Maine residents since Jan. 1, 2013, have a jump-start on saving for college.
The Harold Alfond College Challenge, also known as the Alfond Grant, provides a $500 grant to eligible Maine resident babies to be used for future higher education expenses. As of March 31, 2023, there were 51,089 Maine children with an Alfond Grant who have a NextGen 529 account, and 145,201 Alfond Grants have been awarded to Maine children over the years.
Please consider opening and contributing to a NextGen 529 account and help make a student’s higher education dream a reality.
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