SECURE Act affect Maryland 529

Forum|Forum|5 years ago
March 23, 2021
1 reply
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Wondering if taking a distribution (up to $10k) from my 529 to directly pay student loan debt is considered as a qualified distribution in the State of Maryland?

Not A Product Question

MinhT1

Yes, Maryland does conform with Federal tax law in allowing a lifetime use of $10,000 from a 529 plan to pay student loans.

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Tjo716Author

Thanks for the response. A few days ago I came across a Maryland 529 bulletin (dated Aug 2020) that, in part, states "Amounts paid as principle on any qualified education loan are not treated as Qualified Education Expenses under Maryland.

This appears to contradict your statement. Could you please advise?

Thanks!

KrisD15

There are two issues.

1. If a distribution is made form a 529 plan, up to 10,000 may be applied to pay student loan. That is true for Federal and State.

2. Maryland has a CREDIT for student loan payments, but the criteria for that is quite different. The credit does not have anything to do with 529 distributions.

Information about Maryland Student loan credit

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