M ESP W ORKPLACE S A V I NGS
The Michigan Education Savings Program (MESP) is the state
sponsored 529 direct sold college savings program. MESP is a
simple way for families to save for a loved ones higher education
expenses.
Similar to how a 401(k) plan is used to save for retirement, a 529
account is a tax-advantaged way to save for higher education.
WHAT IS MESP?
529 PLANS OFFER MANY ADVANTAGES
ACCESSIBLE
Anyone who is a U.S. citizen or resident
alien and at least 18 years old who
would like to contribute on behalf of a
beneficiary (the person for whom you
are contributing money, including a
minor child, a spouse or yourself) can
establish a 529 account.
VALUABLE
529’s can be used to cover a range of
expenses, including mandatory fees,
books, supplies, and equipment
required for enrollment or attendance,
along with certain room-and board
costs.
TAX-FREE
Contributions grow tax-deferred,
meaning potentially bigger gains
over time. Withdrawals are tax-free
when the money is used for qualified
higher education expenses.
FLEXIBLE
Funds can be used at eligible
schools nationwide. So whether the
beneficiary wants to be a rocket
scientist, welder or chef, he or she
is covered.
Michigan’s direct-sold 529 College Savings Program
MIsaves.com | 1-877-861-MESP
FAQ GUIDE
MYTHS AND MISCONCEPTIONS
ABOUT 529 SAVINGS PLANS
529 savings plans are only for in-state,
public colleges or universities.
FALSE Funds can be used to send your children,
grandchildren, other loved ones, or even yourself to
any accredited public or private U.S. college or
university —or two-year technical or vocational
institution— as well as qualifying international
institutions.
I must open a 529 account in the state
where I live.
FALSE You can invest your money in almost any
state’s 529 plan, the majority of which have no
residency requirements. Before investing in a
particular plan, you should consider whether the
state in which you or your designated beneficiary
reside or have taxable income offers any specific
benefits. Some states, including Michigan, allow you
to deduct contributions from your taxable state
income, giving you a financial incentive to invest in
your home state plan.
If I save in a 529 plan my child will not get
Financial Aid.
FALSE Money saved in a 529 plan does not
disqualify students for financial aid. Actually, 529
assets are typically treated as belonging to the
parent (or grandparent, etc.) and count less in
Expected Family Contribution (EFC) calculations
than assets held in the child’s name.
My beneficiary gains control of the money
when he or she gets to be college age.
FALSE The account owner (you) is always in
charge. This means you control the funds in any 529
account you open. The beneficiary cannot withdraw
money or change investment options.
My 529 account can never lose value.
FALSE Like any investment, a 529 account can gain
or lose value over time. To help protect your
investment, many plans offer an age-based or
enrollment year option that automatically moves
your money into more conservative allocations as
your beneficiary gets closer to attending college.
This option may help your account preserve its
principal and earnings. However, it still isn’t a
guarantee that your account won’t decline in value.
Can more than one person contribute to the account?
Anyone can contribute to an account as long as the maximum
account balance does not exceed the per-beneficiary threshold set by
the sponsoring state. The account owner has sole control over the
assets and decides when to withdraw them.
Can I change the beneficiary?
You can change your beneficiary at any time or transfer a portion of
your investment to a different beneficiary. To maintain the tax benefits,
the new beneficiary must be an eligible member of the previous
beneficiary’s family under the IRS definition, such as a sibling, an
aunt, a stepchild, a first cousin or a spouse.
What if my child/beneficiary decides not to attend
college?
You have three choices:
FAQS ABOUT 529 COLLEGE
SAVINGS PLANS
What if my child/beneficiary gets a full or partial
scholarship?
If your child receives a scholarship that covers the cost of qualified
higher education expenses, you can withdraw funds up to the
scholarship amount without any penalty. However, you’ll have to pay
federal and sometimes state income taxes on the earnings portion of
the withdrawal.
If I open an account in my state, then move to another
state, what will happen to the account?
If you move to another state, you can keep your money invested in
your account, and continue contributing to it.
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1. Keep the funds in the account, and the investments will be
available in future years for a sibling or other designated family
member.
2. Change the beneficiary to an eligible family member. Consult your
tax advisor about whether this may create a taxable gift.
3. Make a non-qualified withdrawal. You can withdraw your principal
contributions without a penalty, but any earnings will be subject to
applicable state and federal taxes, plus a 10% federal penalty.
Questions? MESP College Savings
Specialists are here to help!
Learn more about saving for education and MESP.
Access FAQs, explore investment options, use college
savings tools and more at MIsaves.com
Monday through Friday, 8am to 8pm EST
1-877-861-6377
Program Administrator, Michigan Department of Treasury. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributor and
underwriter for the Michigan Education Savings Program. To learn more about the Michigan Education Savings Program, its investment objectives, tax
benefits, risks and costs, please see the Program Description at MIsaves.com. Read it carefully. Investments in the Plan are neither insured nor
guaranteed and there is the risk of investment loss.
Check with your home state to learn if it offers tax or other benefits such as financial aid, scholarship funds or protection from creditors for investing in its
own 529 plan. Consult your legal or tax professional for tax advice. If the funds aren’t used for qualified higher education expenses, a 10% penalty tax on
earnings (as well as federal and state income taxes) may apply. Consult your legal or tax professional for tax advice.
