If you contributed to the 529 plan, you will be able to claim a subtraction from income. If you withdrew money from your 529 plan, you may have to add the withdrawal back to your income if it was not used for educational purposes.
What is the 529 plan?
Its main purpose is to help families contend with the future high costs of their children’s or grandchildren’s college or vocational education
What are the qualifications?
Qualified expenses generally include big-ticket items such as college tuition and room and board, as well as books and supplies. The beneficiary must be attending an accredited institution at least half-time for room and board to be considered an eligible expense.
You can also use up to $10,000 per year from your 529 account for the same beneficiary for elementary or secondary public, private or religious school tuition.
What are the limits?
The minimum amount required to open an account is $25. However, if you choose to fund your NextGen 529 account through automated contributions from a checking or savings account or through payroll deduction (contributions of as little as $25 a month) an initial contribution is not required to open your account.
What about carryovers?
Yes. you may rollover amounts in a 529 plan account to a Qualified ABLE Program account for the same designated beneficiary, or a qualified family member of the beneficiary, federal income tax free, subject to applicable ABLE contribution limits.
What if I don’t use it for education expenses?
If you take a non-qualified withdrawal, the earnings portion of the withdrawal, if any, will be subject to ordinary income tax and 10% additional federal tax
Maine does not offer a deduction on your state tax return for contributions made. However, they allow a subtraction for earnings on a 529 account.
- State section
- Subtractions from income
- Earnings on fund held in an ABLE savings account