New Law: No Federal Income Tax For Mississippi College Savings Programs — Starting Next Year, Withdrawals for College Expenses Free of Federal Taxes

With passage of the new federal tax bill, Mississippi residents interested in saving for college are being given another reason to invest in the Mississippi Affordable College Savings Program (MACS), the state's new tax-advantaged college savings plan. The plan was recently ranked by Money magazine as one of the more attractive programs in the country for state tax benefits. Starting January 1, 2002, any withdrawals used for qualified college expenses will now be free of federal income taxes.

In addition, the new law also raises the amount of college room and board expenses that can be covered by the plan, and allows rollovers and beneficiary (eventual student) changes to include first cousins. Immediate family members were already eligible.

According to State Treasurer Marshall Bennett, "The new tax law definitely makes the MACS plan much more flexible and generous. With the combination of new federal provisions and the plan's current state tax benefits, I urge every resident saving for college to research the program and open an account."

MACS is a flexible, simple-to-invest-in program that allows families of all income levels to open an account. The minimum investment is $25 ($15 through an automatic payroll plan such as payroll deduction), and the maximum account balance limit is $235,000. The money can be used for future costs at colleges throughout the country, as well as certain foreign schools. Expenses covered include tuition, fees, supplies, books, and certain room and board costs.

For complete details on MACS, visit our Program Overview section.

To obtain enrollment materials, visit our Enroll Today section.

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