Does Michigan Have a 529 Plan? Your Options Explained

Michigan provides residents with options for saving for higher education expenses through 529 plans. These plans are designed to help families set aside funds for future educational costs, offering tax advantages making saving more efficient. The state sponsors programs tailored to support various savings goals for post-secondary education.

Michigan’s 529 Plan Options

Michigan offers two primary 529 plans: the Michigan Education Savings Program (MESP) and the Michigan Education Trust (MET). The MESP is a direct-sold 529 college savings plan, allowing account owners to choose from a variety of investment options, including age-based portfolios and individual fund choices. Contributions to MESP accounts are invested, and the growth is tied to market performance.

The Michigan Education Trust (MET) is a prepaid tuition program. This plan allows individuals to purchase tuition credits at today’s prices, which can then be used for future tuition and mandatory fees at Michigan public universities and community colleges. MET aims to protect against rising tuition costs by locking in current rates, providing a different approach to educational savings compared to market-based investments. While MET primarily covers tuition, it does not cover room, board, or books.

Michigan residents contributing to MESP or MET can benefit from state income tax deductions. For MESP, individuals can deduct up to $5,000, and married couples filing jointly can deduct up to $10,000 from their Michigan taxable income. Contributions to MET are fully deductible from Michigan taxable income. Investment earnings grow tax-deferred, and qualified withdrawals are exempt from federal and state income taxes when used for eligible education expenses.

Qualified education expenses for both plans include tuition, fees, books, and supplies at eligible educational institutions. This includes accredited private or public colleges, universities, community colleges, trade schools, and graduate schools across the United States, and in some cases, abroad. Certain room and board expenses, computer equipment, and up to $10,000 for K-12 tuition are qualified expenses. Funds can also be used for apprenticeship programs registered with the Secretary of Labor, and up to $10,000 in student loan repayment over the lifetime of the beneficiary.

Account ownership for MESP is open to any U.S. citizen or taxpayer at least 18 years old, and a beneficiary who needs a Social Security or Taxpayer Identification Number can be anyone. For MET, while purchasers can be from anywhere, the beneficiary must be a Michigan resident. Both plans allow for portability, meaning funds can be directed to out-of-state schools or private institutions, and can be transferred to immediate family members if the original beneficiary does not use them. MESP accounts accept contributions until the balance reaches a limit of $500,000 per beneficiary.

Enrolling in a Michigan 529 Plan

Opening an account for the Michigan Education Savings Program (MESP) or the Michigan Education Trust (MET) begins online through their official websites. Prospective account owners will need to provide personal information for themselves and the beneficiary. This includes names, addresses, dates of birth, and Social Security or Taxpayer Identification Numbers.

To initiate contributions, provide bank account details, such as the routing number and account number, for electronic fund transfers. Both MESP and MET allow initial contributions as low as $25, with MESP having a $15 minimum for payroll deductions. Account owners can establish recurring contributions through automatic deductions from a bank account or payroll, or make one-time contributions via check or electronic transfer.

After enrollment and the first contribution, account access is granted through an online portal. This portal allows account owners to manage investments, view statements, and track account performance over time. Regular statements detailing account activity and balances are provided to keep account owners informed about their savings progress.