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U.Plan Prepaid Tuition Program

The Massachusetts U.Plan Prepaid Tuition Program, not a true 529 plan, issues Massachusetts general obligation bonds (federal and MA state tax-free) which will be accepted at participating Massachusetts institutions in payment of tuition.


  • Program typePrepaid contract
  • Enrollment periodTypically May and June each year.
  • Inception1995
  • State agency
    Massachusetts Educational Financing Authority (MEFA)
  • Tax deduction
    Tax deduction for single filers $1,000/yr
    Tax deduction for joint filers $2,000/yr

Ratings & Rankings

Our overall rating for MA residents

This is an excellent program with many benefits for the participant and positive investment attributes. If it has any significant weaknesses then it also has some particularly good things to recommend it.

Our overall rating for non-residents

This is an excellent program with many benefits for the participant and positive investment attributes. If it has any significant weaknesses then it also has some particularly good things to recommend it.

Savingforcollege.com's 5-Cap Ratings provides an evaluation and comparison of 529 plans, utilizing a formula that examines dozens of factors grouped into the following categories.

Financial Benefits

4.00

Features

3.00

Safety

5.00

Reliability

4.00

Eligibility

State residency requirements:

None

Who can be a participant/owner in the program?

Individuals

Significant time or age restrictions imposed by the program:

A tuition certificate must be redeemed within 6 years after its maturity date.

Contributions

Maximum contributions:

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Minimum contributions:

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Contractual Features

Contract prices:

Ranges from a minimum of $300 to as much as the cost of four years of tuition at the highest-cost participating institution.

Available tuition packages:

Massachusetts general obligation bonds that may be redeemed for a pre-determined percentage of tuition and fees at a participating Massachusetts institution.

Benefits for beneficiary attending private or out-of-state institution:

Participating public and private institutions in MA are covered by the U.Plan. Use at non-participating and out-of-state institutions provides a return of principal plus interest compounded annually equal to the Consumer Price Index.

Contract payment options:

Lump sum only.

Are program benefits backed by the full faith and credit of the state?

Yes

Are program benefits collateralized or guaranteed in any other way?

No

Fees & Expenses

Enrollment or application fee:

None.

Taxes and other Benefits

  • Tax deduction for single filers$1,000/yr
  • Tax deduction for joint filers$2,000/yr

Example

Married filing jointly residents contributing $100/month can expect an additional $0 a year in tax savings.

Program match on contributions:

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State tax deduction or credit for contributions:

Effective January 1, 2017 through the 2021 tax year, contributions to Massachusetts 529 plans of up to $1,000 per year by an individual, and up to $2,000 per year by a married couple filing jointly, are deductible in computing Massachusetts taxable income.

State tax recapture provisions:

The principal portion of nonqualified withdrawals from this plan are included in Massachusetts taxable income to the extent of prior Massachusetts tax deductions.

State definition of qualified expenses

The state conforms with the federal definition of qualified education expenses, which includes expenses for higher education, as well as up to $10,000 per year in tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.

State tax treatment of qualified distributions:

As a Massachusetts general obligation bond, earnings from the U.Plan are exempt from Massachusetts tax. Massachusetts law also exempts qualified distributions from Massachusetts and non-Massachusetts 529 plans.

State tax treatment of rollovers:

Not applicable. Because U.Plan is not a 529 plan, rollovers into U.Plan are not eligible for federal or state tax-free treatment.

Does the sponsoring state exclude the value of an account for state financial aid purposes?

No

Does participation in the program provide beneficiaries with any advantages in qualifying for resident tuition status at state institutions?

No

Does the program have a formal agreement with a rewards program or outside scholarship program?

Yes, the Upromise Rewards program can be linked to any 529 college savings plan. Upromise Rewards is free to join and offers members cash back for college.

Statutory protection of an account from creditors:

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Distributions & Terminations

To whom are distributions made payable:

Account owner or eligible educational institution.

Account Changes

Policy regarding participant/owner changes:

Accepts changes to ownership with appropriate documentation.

Contact

Website:

http://www.mefa.org/uplan

Telephone:

1-800-449-6332

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