The Finance Authority of Maine (FAME) and the State Treasurer’s office highlighted a small but significant provision of the Maine State Legislature’s recently signed Budget Bill. A budget bill passed earlier in the session would have required that distributions from 529 plans other than Maine’s own NextGen Plan would be subject to state taxation for a three year period, even if used for qualified higher education expenses.
However, according to a press release, the Legislature’s Appropriations Committee has removed that requirement, citing their desire to encourage investment for Maine students to continue their education beyond high school.
Active in encouraging the removal of this unequal tax treatment provision, Merrill Lynch Director of Education Savings Programs, Chuck Toth, said, “Maine continues to take a leadership role in advancing the public policy goal of helping Maine families invest for higher education through tax-advantaged 529 programs, regardless of which program the investor chooses.”
McCormick and FAME CEO Charlie Spies agreed that having qualified distributions from all 529 programs now tax-free at both the federal and state level in Maine is less confusing and should help families save for college with these tax advantaged programs.