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When it comes to saving money for college, there are many options available—each with their own set of benefits. The best option for you depends on multiple factors, like your savings goals, risk tolerance and investment preferences.

MESP may check all the right boxes

529 plans are one of the most popular ways families choose to save for college. Other common methods include Roth IRAs or a standard bank savings account.*

MESP Michigan Education Savings Program logo

1
  • Can reduce your state taxable income up to $10,000
  • Limitations apply.
  • Tax-deferred growth
  • Tax-free withdrawals for qualified education expenses
  • Investment options
  • No income restrictions
  • No age restrictions for withdrawals
  • High annual contribution limits

Roth IRA2

  • No state tax deductions
  • Tax-deferred growth
  • Potential tax-free withdrawals**
  • Investment options
  • Income restrictions
  • Age restrictions for withdrawals
  • Lower contribution limits

Bank Savings Account3

  • No state tax deductions
  • No tax-deferred growth
  • No tax-free withdrawals
  • No investment options
  • No income restrictions
  • No age restrictions for withdrawals
  • High annual contribution limits

Moreover, money saved in a 529 does not disqualify students for financial aid. 529 assets are typically treated as belonging to the parent (or grandparent, etc.) and count less in Expected Family Contribution (EFC) calculations than assets held in the child’s name.

Learn more at https://studentaid.gov/ or check with the schools you are considering.

  1. *Read about material differences between MESP, Roth IRAs and bank savings accounts. This material does not take into account any specific objectives or circumstances of any particular investor or suggest any specific course of action. Be sure to consult your legal or tax professional for tax advice.↩
  2. **No tax-free distributions for education expenses unless account owner is age 59 ½ or older and account has been established for five years.↩

Why choose MESP?

  • MESP offers a tax deduction to Michigan taxpayers—up to $10,000 for joint filers or $5,000 for single filers.4 Contributions in excess of these amounts may be deducted over the following five years.
  • With an MESP account, any growth you see over time won’t be subject to taxes down the line if used for qualified higher education expenses.
  • MESP savings do not disqualify students from financial aid and count less in Expected Family Contribution than assets held in the child’s name.5

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Have any questions about ways to save for education? We have answers.

MESP provides a unique set of benefits that can mean more flexibility and growth potential, including:

  • Tax-free qualified withdrawals
  • Michigan state tax deduction
  • Low fees and expenses
  • Easy-to-choose investment options
  • Favorable financial aid treatment
  • Use for a wide range of education expenses and programs—in Michigan and around the world

Get more details and compare savings options.

No. Your MESP funds can be used at any accredited university in the country—and even some abroad. This includes public and private colleges and universities, apprenticeships, community colleges, graduate schools and professional schools.1 Up to $10,000 annually can be used toward K-12 tuition (per student).1 In addition, your 529 can be used for student loan repayment up to $10,000 lifetime limit per individual.1 Review a list of qualifying expenses and the state tax treatment of withdrawals for these expenses in the Program Description.

MESP provides the maximum allowable 529 plan tax benefits available to Michigan taxpayers. When you contribute to an MESP account, any earnings can grow federal and Michigan income tax-deferred until withdrawn. In addition, withdrawals used to pay for qualified education expenses are free from federal and Michigan income tax.

Michigan taxpayers may also be eligible for a Michigan income tax deduction on contributions made to MESP up to $10,000 for married couples filing jointly or $5,000 for individuals filing single per year. A Michigan taxpayer is permitted a deduction from Michigan adjusted gross income for a contribution to an account less any Qualified Withdrawals made during the tax year. Amounts transferred from another 529 college savings plan are not eligible for the Michigan income tax deduction.

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