Maryland’s 529 plan — officially the Maryland Senator Edward J. Kasemeyer College Investment Plan — is a tax‑advantaged college savings account that lets you invest money for education expenses. These accounts grow tax‑deferred, and withdrawals used for qualified educational costs are tax‑free federally and in Maryland.
This plan is direct‑sold (you open it yourself, not through a financial advisor) and is managed by T. Rowe Price. Maryland also used to offer a prepaid tuition plan, but new enrollments have been closed.
The Maryland plan has earned strong rankings from independent evaluators like Morningstar, receiving a Silver rating, which reflects solid investment management, strong oversight, and good long‑term performance compared to other states’ plans. It has also placed highly in performance rankings over three‑ to ten‑year periods.
State Tax BenefitsMaryland residents get a meaningful state income tax subtraction for contributions — up to $2,500 per beneficiary per year (or $5,000 for joint filers). This can make a big difference in your tax bill and often outweighs small differences in fees for Maryland taxpayers.
You can start with a relatively low minimum (often around $25), and there are multiple investment options including age‑based and fixed portfolios. The plan covers a wide range of qualified expenses, including college‑level tuition, certain K‑12 tuition costs, apprenticeships, and even student loan repayments under current laws.
Although it’s a Maryland plan, you can use the funds at eligible schools anywhere in the U.S. or some abroad — you’re not restricted to Maryland colleges.
Maryland’s fees are competitive, but they aren’t the absolute lowest. Some out‑of‑state plans (like Utah or New York) have very low costs, especially in index‑based portfolios. For households that don’t value the Maryland tax benefit — such as non‑residents — these low‑fee plans might outperform over the long term.
Unlike large national plans, Maryland’s plan has a smaller menu of investment choices. If you want very specific fund types or super‑custom strategies, you might find more variety elsewhere.
If you’re wondering how the Maryland 529 plan fits into your overall tax and education strategy — contact Watter CPA today. Reach out to our dedicated team for personalized guidance on contribution levels, tax savings and long-term planning for your family.
