Benefits & Tax Advantages
Invest in your child's future with the Michigan Education Savings Program
Many families hope to see their child or loved one graduate from college someday, but it takes more than hope to get there. The Michigan Education Savings Program (MESP) is a 529 college savings plan that can help your family save for future higher education expenses.
Investing in education is a smart move and the tax advantages built into MESP can help accomplish your college savings goals that much faster.
- Tax Advantages
- Flexible Features
- Affordable and easy to contribute
- Choice of Investment Options
- Low Fees
- Managed By a Leading Financial Services Provider
- Easy Access to Your Account
Contributions and any earnings used to pay for qualified higher education expenses are Federal and state income tax-free.
Any earnings on distributions from your MESP account used to pay for qualified higher education expenses will be free from Federal and state income tax.
Michigan income tax deduction on contributions
Michigan taxpayers may also be eligible for a Michigan income tax deduction on contributions made to MESP up to $10,000 for married couples filing jointly or $5,000 for individuals filing single per calendar year.
A Michigan taxpayer is permitted a deduction from Michigan adjusted gross income for a contribution(s) to a MESP account(s) less any Qualified Withdrawals from a MESP account(s) made during the same calendar year. Amounts transferred or rolled over from another Section 529 plan are not eligible for a Michigan income tax deduction.
Consult with a qualified tax advisor regarding the application of Michigan income tax benefits to your particular circumstances. See the Disclosure Booklet for more details.
Federal Estate and Gift Tax Benefits
Contributions to a MESP account may reduce the taxable value of your estate. For example, contributions to MESP, together with all other gifts from the account owner to the beneficiary, may qualify for an annual federal gift tax exclusion of $14,000 per donor ($28,000 for married contributors), per beneficiary. If an account owner's contribution to a MESP account for a beneficiary in a single year exceeds $14,000 ($28,000 for married contributors), the account owner may elect to treat up to $70,000 of the contributions, or $140,000 for joint filers, as having been made over a period of up to five years for federal gift tax exclusion. Consult your tax advisor.
Anyone May Open an Account
Parents, grandparents, relatives and friends who are U.S. citizens or resident aliens and at least 18 years of age may open an account and contribute to a MESP account on behalf of a beneficiary. Michigan residency is not required. However, investors residing outside of Michigan should consider their own state's plan first as it may have tax advantages that are only available through that state's plan.
Funds Can be Used at Eligible Schools Nationwide
Whether your beneficiary decides to go to a private or public college or university, in-state or out-of-state, trade or graduate school, funds in the account may be used for any type of degree program at any eligible higher educational institution in the nation and many abroad, not just Michigan institutions.
Funds Can be Used for a Variety of Qualified Higher Education Expenses
Funds can be used for tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs, and certain expenses for "special needs" students.
The cost of room and board may be treated as Qualified Higher Education Expenses only if it is incurred during an academic period during which the beneficiary is enrolled or accepted for enrollment in a degree, certificate, or other program which leads to a recognized educational credential awarded by an Eligible Educational Institution, and during which the Beneficiary is enrolled at least half-time. (Half-time is defined as half of a full-time academic workload for the course of study the student is pursuing based on the standard at the beneficiary's Eligible Educational Institution.) The amount of room and board expenses that may be treated as a Qualified Higher Education Expense is generally limited to the room and board allowance applicable to the student that is included by the Eligible Educational Institution in its "cost of attendance" for purposes of determining eligibility for federal education assistance for that year. For students living in housing owned or operated by the Eligible Educational Institution, if the actual invoice amount charged by the Eligible Educational Institution for room and board is higher than the "cost of attendance" figure, then the actual invoice amount may be treated as qualified room and board costs.
Ability to Transfer to Another Beneficiary
If your beneficiary does not attend an eligible educational institution, you may name another eligible beneficiary for your account. The new beneficiary must be a member of the previous beneficiary's family, as described in the Disclosure Booklet (PDF), in order to avoid having this change treated as a non-qualified withdrawal. There is no time restriction or age restriction to use the account proceeds.
Affordable and easy to contribute
Low Minimum Contribution
It is easy to open an account with MESP. The minimum contribution is $25 per beneficiary, per investment option. There are many ways to contribute including personal check, electronic funds transfer, automatic contribution plan from your bank account, payroll deduction, or a transfer of funds from another qualified 529 college savings plan. The minimum contribution is $15 (per pay period; per Investment Option, per beneficiary) when contributions are made using payroll deduction.
No Income Limitations
There are no income limitations.
High Maximum Account Contribution Level of $235,000
You can contribute as much as $235,000 per beneficiary as long as the total balance of all accounts for that beneficiary does not exceed $235,000, including contributions to the Michigan Education Trust (MET) and the Michigan 529 Advisor Plan. Accounts that have reached the maximum account balance limit may continue to accrue earnings but no additional contributions may be made.
Choice of Investment Options
Choice of Investments
MESP offers a choice of nine Investment Options that vary in risk and objective. You can choose an option or multiple options when contributing to MESP.
With MESP, there are no sales charges, start-up or maintenance fees. The total annual asset-based fee for each Investment Option ranges from 0.17% to 0.27% (excluding the Principal Plus Interest Option). The Program Manager is paid a program management fee at an annual rate of 0.05% of the average daily net assets of each of the Investment Options.
For its services administering MESP, a state administrative fee is paid to the Michigan Department of Treasury at an annual rate of 0.05% of the average daily net assets of MESP (excluding any assets in the Principal Plus Interest Option). TIAA-CREF Life pays the Michigan Department of the Treasury a fee equal to 0.05% of the average daily net assets held by the Principal Plus Interest Option. For details on the management fee, please see fees and expenses.
Managed By A Leading Financial Services Provider
The State of Michigan selected TIAA-CREF Tuition Financing, Inc., a leader in managing 529 college savings plans, to serve as Program Manager for MESP. TIAA-CREF Tuition Financing, Inc. is an affiliate of TIAA-CREF, a financial services organization with more than 90 years of investment experience. Visit TIAA-CREF.
Easy Access to Your Account
You will have online access to your account information 24 hours a day, or you can call and speak to one of our college savings specialists Monday through Friday, 8:00 am - 8:00 pm ET. You will receive quarterly and annual statements that show account activity. A separate confirmation statement will also be mailed following each transaction in your account. E-delivery is available if you would like to receive confirmations, statements and disclosure materials online. You can also perform the following account transactions online: request a withdrawal from your account; rebalance funds among investment options, request e-delivery versus paper delivery, establish or change automatic contributions and view pending account contributions.
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