Minnesota 529 Plan And College Savings Options
Minnesota has a 529 plan called the Minnesota College Savings Plan that can help you save for college. Minnesota also has a 529 Able Plan as well.
If you live in Minnesota, these might be good options for you to save for college.
These programs are designed to help make college more affordable - so that you can get the education you need. By saving for college early on, you can make paying for college easier down the road.
If you're not quite sure how 529 plans work, check out this starter guide to What Is a 529 Plan?
There is also a specific order of operations to save for college that we recommend families follow. These programs are specific to the State of Minnesota. Each state has different rules when it comes to 529 plan savings.
Average Cost Of College In Minnesota
When saving for college in Minnesota, it's important to take into consideration the cost of attendance in the state. If you choose to go to an out-of-state school, you need to look at the average cost of attendance in that state.
There are 112 colleges and universities in the State of Minnesota.
The total average cost of college (Cost of Attendance) in Minnesota for in-state residents is $21,064 for 2020. This includes tuition, room and board, books and supplies, and other expenses.
For just tuition alone, the average undergraduate tuition for in-state residents is $8,231 for 2020. The cost of tuition in Minnesota has been rising at about 2.4% per year.
See how this compares to the average cost of college here. Keep in mind the average student loan debt by graduating class here.
Explore the data here.
Minnesota 529 Plan Tax Information
Tax savings is one of the big benefits of using a 529 plan to save for college. On a federal-level, there is no tax savings for contributions, but qualified distributions are tax-free.
Here are the special tax benefits and considerations for using a 529 plan in Minnesota.
Minnesota is one of the few states that allows a tax deduction or credit for contributions to ANY state's 529 plan. They also offer a tax credit depending on income.
You can receive a $1,500 tax deduction for single filers, $3,000 for married couples.
Alternatively, you can receive a tax credit equal to 50% of the contributions made, reduced by any withdrawals, up to $500, subject to a phase-out schedule starting at an adjusted gross income of $75,000.
Maximum: Accepts contributions until all account balances for the same beneficiary reach $425,000.
Minnesota follows federal tax treatment of rollovers.
Qualified distributions from a Minnesota and non-Minnesota 529 plan are tax-free.
Minnesota does not conform with Federal law in regards to using a 529 plan for K-12 tuition. See this guide: Using a 529 Plan For Elementary and High School Private Education.
Minnesota does not conform with Federal law for using a 529 plan for student loans.
Non-Qualified Distributions Taxes, Penalties, Recapture
A non-qualified withdrawal from a Minnesota 529 plan is subject to recapture based on an additional tax on the full principal balance withdrawn.
Minnesota 529 College Savings Plan Options
Minnesota has one 529 plan options - one consumer plan.
Minnesota College Savings Plan
The Minnesota College Savings Plan is the name of Minnesota's 529 Plan. This plan offers a variety of investment options, including age-based portfolios that become more conservative as the child approaches college, and static investment fund options.
The funds offered include Vanguard,TIAA, and DFA.
There is a program management fee of 0.1025%.
The underlying funds all charge expense ratios from 0.02% to 0.14% depending on the investment option.
Who Should Use It:
We recommend that Minnesota residents use the Minnesota College Savings plan due to the tax benefits, low fees, and plan investment options.
We recommend that out-of-state residents utilize other plans.Enable Savings Plan here
Minnesota 529 Able Plan Options
529A Able accounts are accounts designed to help those with disabilities escape poverty and save for themselves. Learn more about 529A Able Plans here.
Minnesota ABLE Plan
The Minnesota ABLE Plan is a 529A plan open to all residents in Minnesota.
This plan allows contributions of up to $15,000 per year from all sources.
It does have a minimum initial contribution amount of $25 per account. The minimum subsequent contribution amount is $25.
The plan does have an account maintenance fee of $60 annually, assessed at $15 per quarter. It also has a program management fee of 0.32%.
You can open an Minnesota ABLE Plan here.
Other Programs To Save For College
A 529 plan is one way to save for college. Remember, we have a full guide on our approach to college savings here - and it helps you find other options.
If you're looking for ways to boost your college savings, check this out:
CollegeBacker is one of our favorite ways to save for college because they make gifting for college so easy. You can setup an account, link your 529 plan (in most states), and get a unique URL that you can share with friends and family to save for your children's college.
Plus, they have Backer Bucks, which allow you to earn rewards and rebates for the shopping you already do - directly deposited into your children's 529 plan.
Upromise is another awesome tool to help you save for college because they have a lot of ways that you can earn money for your 529 plan. You can get rebates and rewards, and you can get cash back into your child's 529 plan by using the Upromise credit card.
Minnesota Financial Aid
Using a 529 plan isn't the only way to save money for college. Each state typically offers a variety of financial aid programs for their residents. These include scholarships and grants, and sometimes unique forgivable student loan opportunities.
Check out the list of Minnesota Student Loan and Financial Aid Programs.
Return to the full list of 529 Plans By State.