MD 529 pre paid tuition debacle
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Anonymous
| We are not sure how it will all shake out. They are claiming that there was a miscalculation error but this is untrue. It appears to be a nefarious breach of contract- They previously paid account holders around 5-6 percent interest per year. They then decided that they were no longer going to do this anymore under the guise of a "miscalculation" and are basically giving people no interest at all....even though contractually they are not allowed to do this...so people who have had money sitting in their accounts for 18 years have less money than they put in 18 years ago when fees are taken out. When people last checked their balances prior to the "miscalculation" they had accumulated interest for say 18 years...and now checking currently they have no interest....so some people went from having $100,000 in their accounts to $50,000 in their accounts as an example |
Anonymous
|
Ugh.
I got a letter from Maryland below and now have to figure out what the F to do. Both my kids have traditional 529s and fully paid 4-year UMD prepaids. (Hedging bets on where they go.....) Kid#1 is a Sophomore Kid #2 is in 4th grade Neither have earned income (tho probably #1 this summer) so I am not sure I can roll part into an IRA in their names. I could do one IRA in my name. Anyone want to chime in on what they are doing??? ------------ Dear Maryland Prepaid College Trust Account Holder, As you may recall, oversight of the Maryland 529 Program, including the Maryland Prepaid College Trust (MPCT), was transferred to my office almost one year ago. Shortly after, I issued a Decision Memorandum which, among other things, outlined the implementation of a four-phase plan. Phase 1 included the issuance of decisions related to certain earnings rates, while Phases 2 and 3 included the required systematic changes to implement the new earnings rates and a legislatively mandated claims process. Phase 4 included the transition to a more traditional defined benefit plan. In the past months, I have communicated with you as we have reached each phase and do so now to announce the upcoming changes associated with completion of the fourth and final phase. As discussed in last year’s Decision Memorandum, soon all contributions and balances in MPCT accounts will earn zero percent interest. The effective date of this change will be July 16, 2024. This change will bring Maryland in line with many other prepaid plans and align more closely with the General Assembly’s original intent to create a defined benefit plan. It is important to note that while new earnings will not continue to accrue, account holders will retain access to all earnings accrued up until that point. The MPCT Disclosure Statement Supplement includes necessary updates to the MPCT Disclosure Statement to implement this change. Of course, the decision to continue to participate in the changed plan is yours. This is an important decision, and I urge you to take your time to choose how you wish to move forward. As law changes do not allow for new MPCT accounts to be established, there will be no opportunity to reestablish a MPCT account if you choose to rollover or refund the balance of your account. That said, recent policy changes at the federal level have removed certain barriers that may have previously complicated these decisions, as well as expanded options for rollovers that may be of interest. Specifically, recently issued IRS Notice 2024-23 allows for more than one tax-free rollover for certain affected MPCT account holders through December 31, 2024. Additionally, federal legislation that became effective on January 1 now allows for direct rollovers into Roth IRA accounts, subject to certain limitations. There are many factors to consider when determining what is best for you and your family and I encourage you to take the time to fully consider your options and to consult a tax advisor before making any decisions. Should you wish to proceed in rolling over part or all of your MPCT funds, please visit maryland529.com to download the appropriate form and to log in to your account. Should you have any questions regarding the rollover process or other account specific questions, please contact the MPCT program manager at mpctquestions@mdprepaidcollegetrust.com or 1-888-4MD-GRAD (1-888-463-4723), Option 2. Additionally, Maryland 529 staff can be reached directly at md529@treasurer.state.md.us should you need further assistance. Kind regards, Dereck E. Davis Maryland State Treasurer |
Anonymous
| Makes no sense to get into the prepaid option. No flexibility |
Anonymous
Its not about that. Its about what to do now. Getting OUT (not into) makes sense but the question is WHERE to go now? What are viable options? |
Anonymous
| You need to find out what your rollout fogure would be and compare that to weighted average tuition payments you could claim. It might well make sense at least to leave your sophomore’s money in, or it might make sense to leave them both in as a hedge depending on how much you have in the 529. |
Anonymous
This information was out there for a year. I rolled over my accounts to MCIP months ago. It was very time consuming. |
Anonymous
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We have 4 years pre-paid with for one kid.
Not sure what we will do. Explain it in plain english - what's the ideal move? |
Anonymous
You can rollover into the Maryland College Investment Plan. You’ll have more control and more transparency. |
Anonymous
I think you are a bit like me - I am the one who posted today and pushed this up again. Thing is that I was split between 529 and the Prepaid and ESSA. That came for me because I had someone that had a daughter going to college just as 2008 happened. As he said, "I had 4 years saved, now I only have 3." To me it was about balancing risk. (In total, between prepaid, 529 and ESSA - I am sitting on $108K. Pretty well split between prepaid and 529/ESSA. All the while knowing if he didn't go to a public university that I certainly barely have anything saved!) So the person that suggested leaving the sophomore's money in and moving child #2s money is about right probably for me. He's too close to going to me to want to take on risk. But for #2, she is farther out and I can roll with any bumps that come along. Plain English is - How far out are you and how much risk you want to take? |
Anonymous
| New poster here. I’m also trying to figure out what to do. DS in 5th grade. I’m thinking I leave the funds in pre-paid plan and hope he goes to a college in MD. If that happens then all is well. I read somewhere that if funds are used for non Maryland college then you get a percentage of the cost of an MD college tuition at that time. Does anyone know how this amount is calculated. It seems we have till December to make a decision. |
Anonymous
My kid is 4.5. He starts K in the fall, so we are 13 years out. We paid around $44K right before his first birthday. We bought the prepaid because it’s a defined benefit. It’s our “in case a parent dies” backup plan for college, the kid has 4 years of college covered somewhere. MD has been pretty good at keep tuition inexpensive, but there’s no guarantees they won’t go the path of Penn State (high instate tuition). I guess our needs haven’t really changed. Would still prefer a defined benefit, as spouse has a well-managed illness that could eventually hamper ability to work. |
Anonymous
This is similar to our thinking. Knowing that college is already paid for. We are older parents and this way we know DC has an option to go to college. |
Anonymous
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Thanks to an unbelievable grass roots effort, the value of your account probably went up tremendously. See Facebook group free our interest now Maryland 529. They can answer all of your questions. |
Anonymous
Yes- This group did an amazing job. They really moved mountains! My children really benefitted. |