The Massachusetts 529 College Savings Plan

MEFA's U.Fund allows you to save for your child's education in a flexible, tax-advantaged account. You can use your savings to pay for qualified education expenses at any eligible institution in the country. There's no minimum to open an account, and you can set up a gifting page so that others can contribute.

How the U.Fund Works →

College Cost Projector

Get an estimate of the amount it will cost for your child to attend college at a certain time in the future.


Features of the U.Fund 529 College Savings Plan

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Allows you to choose how your money is invested
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Can be used at any accredited college and for up to $10,000/year of K-12 tuition expenses
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Easy to open and eligible for tax benefits
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Professionally managed by Fidelity Investments

U.Fund FAQs

How can I add funds to my U.Fund account?

You can contribute to your U.Fund by mailing in a check to U.Fund College Investing Plan, c/o Fidelity Investments, College Plan Service Center, P.O. Box 770001, Cincinnati, OH 45277-0015, or you can have funds sent electronically, either as a one-time transaction or as an automatic withdrawal from your checking account or paycheck. Log into your U.Fund account to set up these withdrawals. Fidelity also offers a mobile check deposit for smart phone users. This allows you to simply take a picture of a check with your smart phone and forward the image to Fidelity. Learn more here.

How much can you contribute to the U.Fund in a year?

You can save up to $16,000 in a year in the U.Fund before incurring a gift tax penalty. There is another option of prepaying 5 years at once. That is, you can contribute $80,000 with the understanding that you will not contribute again for the next 5 years.

How is the U.Fund viewed in the financial aid application process?

U.Fund accounts owned by a parent are viewed as a parent asset on the FAFSA. The financial aid formula assumes that 0-5.6% of parent assets can be used to pay for college and are therefore added to the Expected Family Contribution. Thus U.Fund savings have a minimal impact on financial aid eligibility.

Can you take a tax deduction for 529 contributions in Massachusetts?

Yes, when you save in the U.Fund, you are eligible for a Massachusetts state income tax deduction. Savers can claim a MA state income tax deduction of up to $1,000 for single filers and up to $2,000 for married persons filing jointly. Deductions should be included on Schedule Y (within the income modifications/deductions section on most tax software).

What is a college fund account?

A college fund account allows you to save for future college expenses by setting aside money today. Massachusetts offers two college fund account options, both with tax advantages: the U.Fund 529 College Investing Plan and the U.Plan Prepaid Tuition Program. The U.Fund provides different investment options and can be used at practically any college or university in the country. The U.Plan allows you to lock in current rates on mandatory tuition and fees at over 70 colleges and universities in Massachusetts

Is the MA state income tax deduction for U.Fund contributions given per child?

No, the maximum amounts for the MA state income tax deduction are the total that tax payers can receive. Single filers saving in the U.Fund can receive $1,000 and married persons filing jointly can receive $2,000. Deductions are included on Schedule Y (within the income modifications/deductions section on most tax software).

Can a grandparents receive a MA state income tax deduction for a U.Fund contribution?

If the grandparent is the U.Fund owner, then he or she can receive a tax deduction for a U.Fund contribution. If the grandparent is not the owner of the account, the law is unclear as to who exactly can claim a tax deduction for 529 contributions, and we suggest you consult with your tax preparer for guidance. We will state as a general matter of course, if a non-owner did contribute to a U.Fund account and would want to claim that as a deduction, that person should be able to show documentation of that contribution in the case of an audit.

Is there a recent law that made a change to the rules on 529 withdrawals?

Yes, thanks to the SECURE Act, distributions from 529 accounts (up to $10,000 in total) can now be used to pay back student loans. Learn more here.

Are 529 plans protected from creditors in Massachusetts?

The United States Bankruptcy Code provides that contributions to 529 accounts may be protected from creditors in bankruptcy proceedings, subject to certain limitations. Should you file for relief under the Bankruptcy Code, your 529 account will be protected if, at the time the contributions were made, the designated beneficiary was your child, stepchild, grandchild, or step-grandchild (including a child, stepchild, grandchild, or step-grandchild through adoption or foster care), subject to the following limits:

  • Contributions made to all 529 accounts for the same designated beneficiary at least 720 days before a federal bankruptcy filing are completely protected;
  • Contributions made to all 529 accounts for the same designated beneficiary more than 365 days but less than 720 days before a federal bankruptcy filing are protected up to $6,825; and
  • Contributions made to all 529 accounts for the same designated beneficiary less than 365 days before a federal bankruptcy filing are not protected against creditor claims in federal bankruptcy proceedings. Your own state law may offer additional creditor protections. Consult with an attorney regarding your specific situation.

Questions?
Call us at (800) 449-6332 Monday to Friday, 9am-5pm ET or email us anytime at collegeplanning@mefa.org