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State’s New College Savings Tax Deduction Earning High Marks

Contact:
Martha Savery, Director of Public Affairs
msavery@mefa.org
617.224.4813

METHUEN – The state’s new college savings tax deduction, signed into law by Governor Charlie Baker, is achieving its goal of encouraging families to save for college. In the first three months of 2017, families opened 65% more accounts in the U.Fund College Investing Plan when compared against the same period last year according to MEFA and Fidelity Investments.

The U.Fund College Investing Plan allows families to invest savings that grow federal and Massachusetts income tax deferred and any earnings are tax free when withdrawals are spent for qualified higher education expenses. The plan is offered by MEFA and the accounts are professionally managed by Fidelity Investments. Accounts can be opened with a $50 contribution or with as little as $15 when the account owner sets up automatic monthly contributions.

“This new tax deduction creates an important incentive for families facing many demands on their spending and saving,” said Governor Baker. “Helping Massachusetts’ parents and students prepare for college by saving now will translate to fewer student loans down the road.”

During the first quarter of 2017 a total of 5,274 new U.Fund accounts were opened, compared to 3,197 in the same period last year. The new state tax deduction allows taxpayers to claim a deduction for contributions made to the MA college savings programs. Single persons may claim up to a $1,000 deduction, and married persons filing jointly may claim up to a $2,000 deduction. The college savings tax deduction was included in the Job Creation and Workforce Development legislation signed into law by Governor Baker last summer.

“This tax deduction has given families the kick start they were seeking to put their college savings plan in place and achieve their goal” said Thomas Graf, Executive Director of MEFA, which offers the state’s two tax-advantaged college savings plans, the U.Fund College Investing Plan and the U.Plan Prepaid Tuition Program.

The governor joined parents and children to encourage college savings and childhood literacy at a Start U.Reading program at Nevins Memorial Library in Methuen. The event celebrated National 529 Day, held annually each May to highlight the importance of saving for college in a 529 college savings plan, such as the U.Fund.

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About MEFA
MEFA is a not-for-profit state authority, not reliant on state or federal appropriations, established under Massachusetts General Laws, Chapter 15C. MEFA's mission, since its founding in 1982, has been to help Massachusetts students and families access and afford higher education and reach financial goals through education programs, tax-advantaged savings plans, low-cost loans, and expert guidance. Recently, MEFA's mission has been enriched through its statutory designation to establish and administer the ABLE Savings Plan, created to help individuals with disabilities save for disability-related expenses. Visit mefa.org to learn more or follow MEFA on Twitter @mefatweets and on Facebook at mefaMA.

About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses it serves. With assets under administration of $6.0 trillion, including managed assets of $2.2 trillion as of March 31, 2017, Fidelity focuses on meeting the unique needs of a diverse set of customers: helping more than 26 million people invest their own life savings, 23,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of their customers. For more information about Fidelity Investments, visit fidelity.com/about.

The U.Fund College Investing Plan is offered by MEFA and managed by Fidelity Investments. If you or the designated beneficiary is not a Massachusetts resident, you may want to consider, before investing, whether your state or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.

Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Fidelity, Fidelity Investments, and the Fidelity Investments & Pyramid Design logo are registered service marks of FMR LLC.

MEFA, MEFA U.FUND MASSACHUSETTS 529 PLAN, and U. FUND are registered service marks of the Massachusetts Educational Financing Authority.

Please carefully consider the plan's investment objectives, risks, charges, and expenses before investing. For this and other information on any 529 college savings plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view one online. Read it carefully before you invest or send money.

Fidelity Brokerage Services LLC, Member NYSE, SIPC

900 Salem Street, Smithfield, RI 02917

© 2017 FMR LLC. All rights reserved.





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