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FOR IMMEDIATE RELEASE
March 14, 2023
Contact:?Ron Leix, Treasury, 517-335-2167
Investing Tax Refund in MESP could help
Jumpstart College Savings
LANSING?? The 2023 tax filing season is in full swing -- and the refund that some taxpayers will receive makes the process of preparing state and federal tax returns rewarding. It is also the time for some Michigan families to evaluate their financial situation and plan for their future.?
According to IRS data, federal tax refunds averaged $3,039 in 2022. ?Of course, that raises the question of what to do with the money. ?Why not consider jumpstarting college savings with a Michigan Education Savings Program (MESP) account?
Michigan families can score big at tax time with the MESP's triple tax benefits:
- State Income Tax Deduction
Individual taxpayers may deduct up to $5,000 in MESP contributions each year from their Michigan-adjusted gross income, and taxpayers filing jointly may deduct up to $10,000.
- 100% Tax-Deferred Growth
In addition to a state income tax deduction, any account earnings grow 100 percent tax-deferred at both the state and federal levels. This means that instead of paying taxes annually on any earnings, an account owner can potentially grow their account faster.
- Tax-Free Withdrawals
Account owners can withdraw funds tax free when paying for qualified education expenses at any accredited college, university, or trade schools across the U.S. and many schools abroad. Qualified higher education expenses include tuition, fees, room and board, books, computers, related technology, and more.*
MESP Administrator Diane Brewer is encouraging parents, grandparents, and guardians to put any refund or bonus funds to work in an MESP account for a child or grandchild.
?Investing your tax refund or bonus in an MESP account is a smart and easy way to help plan and save for a child?s postsecondary education,? Brewer said. ?Even a small ?windfall? like a tax refund or bonus can help accelerate the value of a current account or help kickstart a new one.??
MESP is a state-sponsored, tax-advantaged 529 college savings plan created in 2000 to help people save for the cost of higher education.
Managed by TIAA-CREF Tuition Financing Inc. on behalf of the Michigan Department of Treasury, MESP has more than 301,000 accounts with total assets exceeding $7 billion.
Ranked among the nation?s best state-sponsored 529 college savings programs, MESP is one of only two 529 plans in the nation to earn a GOLD rating from Morningstar, an investment research and management firm. ?Based on its 2022 analysis of 54, 529 college savings plans, MESP earned the coveted ?GOLD? rating.
According to the analysis, ?The Michigan Education Savings Program offers a well-rounded menu of affordable options constructed by a forward-thinking team that places it among the best 529 plans across the nation.?
The MESP has retained the GOLD rating for three consecutive years.
MESP is one of three Michigan Section 529 plans, named after the section of the Internal Revenue Code that allowed for their creation. Each plan offers Michigan taxpayers a state income tax deduction on contributions and potential tax-free growth on earnings if account proceeds are used to pay for qualified higher education expenses.
?Whether a child is an infant or a teen, there is no better time to start planning for the future and saving for higher education than right now,? Brewer said. ?And that refunded money from Uncle Sam can really help.?
More information about MESP is available at?MIsaves.com?or 877-861-6377.
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To learn more about the Michigan Education Savings Program, its investment objectives, risks, charges and expenses 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.? TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, is the distributor and underwriter for the Michigan Educations Savings Program. ??Michigan taxpayers can reduce their state taxable income by up to $10,000 if married filing jointly ($5,000 filing single) from contributions made into a Michigan Education Savings Program.? Consult your legal or tax professional for tax advice.
*If the funds aren't used for qualified higher education expenses, a federal 10% penalty tax on earnings (as well as federal and state income taxes) may apply. ?
In an annual review (11/2/2022) of the largest 529 college savings plans (54 plans representing 93% of 529 assets), Morningstar identified 34 plans that rose above their typical peers, awarding those plans Gold, Silver, and Bronze Morningstar Analyst Ratings for 2022.? These plans offer investment options that Morningstar expects will collectively outperform and exhibit some combination of the following attractive features: a well-researched asset-allocation approach, a robust process for selecting underlying investments, a well-resourced and experienced investment management team, strong, stable and engaged oversight from the state and low fees.? The four key pillars used by Morningstar to evaluate 529 college savings plans include ? Process, People, Parent, and Price.? For more information about Morningstar?s overview of the Michigan Education Savings Program, go to Morningstar.com. TIAA-CREF Tuition Financing, Inc. compensates Morningstar for the ability to quote these ratings in public communications. Past performance does not predict future results. Source: Morningstar.com. A Morningstar Analyst Rating for a 529 college savings plan is not a credit or risk rating. Analyst ratings are subjective in nature and should not be used as the sole basis for investment decisions.
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