Michigan Education Savings Program (MESP)

A Plan for Everyone:
Grandparents, Family & Friends

It’s always difficult finding that perfect gift. When you help someone pay for college, you’re giving the best gift of all — a brighter future.

You want to help your grandchild or friend’s kid on their path to college — excellent! But it can be difficult to know whether it’s better to contribute to an existing plan or open a new account. You want to know the pros and cons — like how does your grandchild or friend’s child get the money or what happens if they don’t go to school? And what are the tax implications for your estate? The Michigan Education Savings Program (MESP) accounts for all this and more.

Why Save with MESP

With MESP, you decide how to help. If you want to own the plan, you don’t need to be a parent — anyone can start an account for anyone else. You’ll control how the money’s invested and how it gets spent. Since there’s no age limit attached to a 529 plan, you get more options. Say you opened an account for your grandson but he doesn’t end up going to school. You can let the funds sit till he does, use them yourself to take those community college writing courses you’ve been meaning to, or transfer the funds to another grandchild.

On the other hand, if you just want to support an existing MESP account, anyone can make a gift contribution to anyone else’s plan. Either way, the earnings portion, if any, on that investment can grow free from federal and state income tax. Qualified withdrawals come untaxed as well, and you can spend the money on a lot more than tuition, including: room and board, computers and related technology expenses, supplies, books, and equipment.

What MESP Means for Estate & Legacy Planning

You might find you want to make a larger donation to your grandchild’s account but you’re hesitant to commit. What will it mean for you come tax time? What are the implications to your estate? Don’t worry, you can give with confidence and it won’t adversely impact your tax situation. In fact, there’s no federal gift tax on contributions up to $14,000 per year for single filers and $28,000 for married filers.

If you wish to make a larger contribution, there’s an option to gift amounts up to $70,000 for single filers and up to $140,000 for married filers if pro-rated over 5 years. This means you could make a one-time gift equivalent to the 5-year amount and it could all qualify for the federal gift tax exclusion. Consult your tax advisor.

Gifting — Make a Contribution to an Existing Account

Kids grow out of clothes so fast. Toys are lost and discarded. Books may or may not be read. But making a gift contribution to a child’s college education will last a lifetime. There are so many perfect opportunities to give: at birthdays, holidays, graduations, and other important occasions. And making a gift contribution is easy. To make an eGift to an account download a gift certificate form and mail it in.