1. ABLE Task Force
June 29, 2015

2. Maryland College Investment Plan Maryland Prepaid College Trust
Overview
The College Savings Plans of Maryland is an independent, non-profit Maryland State Agency that offers two Section 529 college savings plans to help families prepare for the future cost of college and reduce future debt.
Maryland College Investment Plan
Managed by T. Rowe Price, offers investors a variety of investment options
Maryland Prepaid College Trust
Allows you to lock-in tomorrow’s college tuition based on today’s prices and helps to hedge against future tuition increases
Both plans can be used at nearly any federally accredited college in the country.

3. College Investment Plan
Comparing the Plans
Prepaid College Trust
College Investment Plan
Affordability
Choose a variety of payment and tuition options
Minimum investment:
$250 by check; or
$25 a month
Flexibility
Change tuition/payment option nearly at any time
Choose from a variety of investment options
Eligible Institutions
4 yr Colleges/Universities
In-State
Out-of-State
2 yr Community Colleges
Trade / Technical Schools
Benefits Paid/Distributions
Semester by Semester
Any dollar amount available in your account
Eligible Expenses
Tuition and Mandatory Fees at a Maryland public college
Up to the Weighted Average Tuition everywhere else
Room and Board eligible when the beneficiary receives a scholarship
Any qualified expense defined by IRS Publication 970

4. College Investment Plan
Unique Tax Benefits
Prepaid College Trust
College Investment Plan
Deduct up to $2,500 from your Maryland adjusted gross income per account each year.
Deduct up to $2,500 from your Maryland adjusted gross income per beneficiary each year.

5. Unique Tax Benefits
Participants in the MD529 plans are not limited to contributing $2500 a year
Contributions over $2500 can be carried forward
Maryland Prepaid College Trust - payments in excess of $2,500 per account can be carried forward and deducted in future years until the full amount has been deducted.
Maryland College Investment Plan - Contributions in excess of $2,500 per beneficiary can be carried forward and deducted for up to the next 10 years.
Only the Account Holder is eligible for the Maryland income deduction and only on contributions he or she makes
REFERENCE SOURCE: Maryland Comptroller’s Administrative Release 32

6. Qualified Education Expenses
Maryland College Investment Plan (MCIP)
Qualified Education Expenses
Outlined in IRS Publication 970 as expenses related to enrollment or attendance at an eligible institution.
Eligible Educational Institution
This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.
Confirm that institutions are eligible by identifying their Federal School Code at the Department of Educations website.
It is the taxpayer’s responsibility to maintain receipts and determine whether distributions are qualified.
The Account Holder will receive a 1099-Q tax document for any year a distribution is made.

7. Taxes on Distributions/Refunds
Income Tax on the earnings if equivalent amount is withdrawn
Recapture MD income deduction on the principal
Student Receives Scholarship, Grant or Tuition Remission
Income Tax on the earnings
10% Penalty on earnings
No penalty for disability or death
Recapture MD income deduction on principal
See MPCT Specific information below
Student Doesn’t Attend School
MPCT Specific
If the child does not receive a scholarship, grant or tuition remission and does not have a qualified exception (death or disability), the account holder may choose to receive a Reduced Refund as follows:
Your actual payments, less any administrative fees and benefits used, plus or minus:
50% of the earnings/losses on those payments if enrolled < 3 years
90% of the earnings/losses on those payments if enrolled ≥ 3 years

8. § 529A vs. § 529 Siblings and step-siblings ABLE Act 529 Statute
Beneficiary Limit
(1) per beneficiary
None
Annual Contribution Limit
$14,000 per beneficiary
Maximum Account Balance
State limit for Section 529 accounts
MD $350,000
Income Limitations
Social Security Income eligibility limit
Beneficiary Change
Siblings and step-siblings
Blood or Marriage
Certification
YES. Signed by a doctor NO
Distribution Frequency
Frequent
Less Frequent
Recapture
(Back to the state)
Medicaid recapture requirement
Reporting
ABLE Reporting requirement
MSRB
Reporting of Account
YES
Monthly Report
Monthly electronic report

9. § 529A vs. § 529 (cont.) ABLE Act 529 Statute Yearly Eligibility YESNO
Home State Requirement
YES or contracting state.
Expenses
Qualified Disability
Qualified Tuition
Tax Penalty on Non-Qualified Expenses
10%
Exceptions:
Death
Contribution growth is returned to the account before the federal tax filing deadline.
Exception:
Disability preventing beneficiary from attending college
Verification of Qualified Expenses
TBD
Taxpayer

10. Dictated by IRS Publication 970
Qualified Expenses
529 Plans
ABLE Accounts
Dictated by IRS Publication 970
Generally:
Tuition
Books and Supplies (as required by the university)
Room and Board (student must be enrolled at least half-time)
Expenses of a special-needs beneficiary necessary for enrollment at an eligible institution
Education
Housing
Assistive technology and personal support services
Transportation
Employment training and support
Health
Prevention and wellness
Financial management and administrative services
Legal fees
Expenses for oversight and monitoring
Funeral and burial expenses
Other expenses approved by the Treasury Secretary

11. ABLE ACT (cont.) Considerations for locating ABLE with CSPM: Board
Currently 10 people/ ABLE would add 10 more
How would the Board address the diverse issues governing both plans?
Staffing and funding
CSPM is funded by the program fees generated from the Plans
Start up costs for ABLE? Who would fund them?
Who would take on the administrative costs to add additional staff ?
Contractual Obligations
T. Rowe Price Program manager – would they be willing to amend their contract?
Future RFP in 2016
What role should Community Development Financial Institutions play?
Verification of Disability
Who will do it? Who will take on the administrative burden?
Medical Information Privacy Issue
Increase administrative costs

12. ABLE ACT (cont.) Other Considerations:
ABLE Home state requirement – prevents national program
Difficult to build economies to scale to keep costs down
Questions about contracting state provisions (accounts not universal)
Qualified beneficiary as mandated Account Owner
What if representative payee, guardianship, POA, parent (loco parentis)?
Divergence between eligibility and verification of contributions
Burdensome to verify eligibility prior to contributions
Passage of (§ 529A)–shifted to the states for implementation
Absent federal guidance or regulations except:
the statute § 529A
Treasury Notice

13. Interim Executive Director
Andrew Friedson
Interim Executive Director
Lauren Shipley
Director of Marketing