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Massachusetts 529 Plan Contribution Limits

Written by Mark Kantrowitz | March 18, 2024

There are no annual contribution limits for Massachusetts 529 plans, other than the annual gift tax exclusion and 5-year gift-tax averaging. Massachusetts 529 plans have a high cumulative contribution limit of $400,000 per beneficiary.

Annual Contribution Limits

There is no annual limit on contributions to Massachusetts 529 plans, just like other 529 plans, but contributions in excess of the annual gift tax exclusion of $18,000 per beneficiary ($36,000 for a couple giving jointly) may be subject to gift taxes or use up the lifetime gift tax exemption if the contributor does not elect to use 5-year gift-tax averaging. If the contributor elects to use 5-year gift-tax averaging, the limits are $90,000 per beneficiary ($180,000 for a couple giving jointly).

Gift taxes, if any, are paid by the contributor, not the account owner or beneficiary.

 

Aggregate Contribution Limits

Each state sets its own aggregate contribution limit, based on the cost of an undergraduate and graduate education in the state. The aggregate contribution limits are usually based on the cost of 7 years of postsecondary education.

The aggregate contribution limit in Massachusetts is $400,000. That’s about the same as the $402,376 average of all state aggregate contribution limits.

After the 529 plan account balance reaches the aggregate contribution limit, no further contributions may be made. Excess contributions will be rejected and returned to the contributor. (This is in contrast to ABLE accounts and Coverdell education savings accounts, which have a 6% excise tax on excess contributions.) However, the Massachusetts 529 plan will continue to accumulate earnings after reaching the aggregate contribution limit.

 

 

Minimum Contribution to Massachusetts 529 Plans

The minimum contribution amount for Massachusetts 529 plans is $15.

Tax Deductions for Massachusetts 529 Plan Contributions

Contributions to Massachusetts 529 plans are made with after-tax dollars, similar to a Roth IRA.

Contributions to Massachusetts 529 plans are tax-deductible on Massachusetts state income tax returns.

Massachusetts provides a state income tax deduction of up to $2,000 per year (married filing jointly) and $1,000 per year (single filers). Contributions beyond the tax deduction’s annual limit cannot be carried forward to future tax years. 

 

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About the author

Mark Kantrowitz is a nationally-recognized expert on student financial aid, scholarships and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make informed decisions about planning and paying for college. Mark writes extensively about student financial aid policy. He has testified before Congress and federal/state agencies about student aid on several occasions. Mark has been quoted in more than 10,000 newspaper and magazine articles. He has written for the New York Times, Wall Street Journal, Washington Post, Reuters, Huffington Post, U.S. News & World Report, Money Magazine, Bottom Line/Personal, Forbes, Newsweek and Time Magazine. He was named a Money Hero by Money Magazine. He is the author of five bestselling books about scholarships and financial aid, including How to Appeal for More College Financial Aid, Twisdoms about Paying for College, Filing the FAFSA and Secrets to Winning a Scholarship. Mark serves on the editorial board of the Journal of Student Financial Aid and the editorial advisory board of Bottom Line/Personal (a Boardroom, Inc. publication). He is also a member of the board of trustees of the Center for Excellence in Education. Mark previously served as a member of the board of directors of the National Scholarship Providers Association. Mark is currently Publisher of PrivateStudentLoans.guru, a web site that provides students with smart borrowing tips about private student loans. Mark has served previously as publisher of the Cappex.com, Edvisors, Fastweb and FinAid web sites. He has previously been employed at Just Research, the MIT Artificial Intelligence Laboratory, Bitstream Inc. and the Planning Research Corporation. Mark is President of Cerebly, Inc. (formerly MK Consulting, Inc.), a consulting firm focused on computer science, artificial intelligence, and statistical and policy analysis. Mark is ABD on a PhD in computer science from Carnegie Mellon University (CMU). He has Bachelor of Science degrees in mathematics and philosophy from MIT and a Master of Science degree in computer science from CMU. He is also an alumnus of the Research Science Institute program established by Admiral H. G. Rickover.

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