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Learning, Sharing, and Teaching => Mini Money Mustaches => Topic started by: easternblockbabe on January 16, 2017, 12:22:06 PM

Title: Massachusetts approves income tax deduction for 529 plan
Post by: easternblockbabe on January 16, 2017, 12:22:06 PM

I just found out this and would like to share it:

Starting in 2017, residents of Massachusetts can deduct contributions to an in-state 529 college savings plan, up to $1,000 per individual or $2,000 per married couple filing jointly.  This is good news for those of us filing taxes in MA!

http://www.savingforcollege.com/articles/massachusetts-to-offer-529-state-tax-deduction-973

Title: Re: Massachusetts approves income tax deduction for 529 plan
Post by: gimp on January 19, 2017, 04:01:24 PM

Wish CA would do this. I'd start a 529 ... right now it doesn't seem useful.

Title: Re: Massachusetts approves income tax deduction for 529 plan
Post by: nvmama on February 26, 2017, 07:47:25 PM

I'm in MA and thinking about taking advantage of this while we can.  However, we never planned to save for our kid's college costs, so I'm a but nervous about it.  Especially if none end up going to college, but odd are at least one will. 
Does anyone have any experience with the MA 529 plans?

Title: Re: Massachusetts approves income tax deduction for 529 plan
Post by: RelaxedGal on March 01, 2017, 01:57:48 PM

No experience other than opening an account last night because I'd learned about it.  The cap is $2,000 for married couples filing jointly ($1000 otherwise), so even if you contribute for the next 18 years and your kid doesn't go to college, that's only $36,000 + growth.  The 10% withdrawal penalty is on the growth  (http://www.savingforcollege.com/intro_to_529s/what-is-the-penalty-on-an-unused-529-plan.php) so what, you've earned another $36K if things are going gangbusters in the stock market for those 18 years?  $3600 possibly penalty, 5.1%x$2000x18 = $1836 definite reward*.

It's a risk, but I'm pretty confident my daughter will go to college/voc/trade school.  It's a small enough risk that I'm going for it. 

* Aw crud, this article (http://www.savingforcollege.com/articles/massachusetts-to-offer-529-state-tax-deduction-973) says it's scheduled to end after 5 years.  That brings down my Definite Reward number.  Your Mileage May Vary.

Title: Re: Massachusetts approves income tax deduction for 529 plan
Post by: Frizhand on April 04, 2017, 08:33:01 AM

Anyone know if there are any income limits or phase outs to this deduction?  I've been contributing to the MA 529 for years but stopped recently.  Now that there is a tax deduction I'm thinking I should start again...my oldest heads to college in 3 years!