Beneficiaries of the Maryland 529 plan will expect tax penalties following frozen trust accounts due to a widespread accounting error.
Maryland 529 Plan Beneficiaries Will Expect to Receive Tax Penalties Following Widespread Accounting Error
While the Maryland 529 plan aimed to financially help low-income families in Maryland, specifically in paying high tuition fees, the Maryland 529 plan beneficiaries will reportedly expect to receive tax penalties following a widespread accounting error in 2022.
According to a report published in WTOP News, there have been over 30,000 frozen trust accounts in the Maryland 529 plan due to the accounting error discovered last year, which led to possible tax penalties for the beneficiaries of the Maryland 529 plan.
Under the Maryland 529 plan, beneficiaries who make more than one rollover in 12 months will expect to be subjected to a 10% penalty; however, even with the errors and possibilities of tax penalties, eligible residents are encouraged to apply for the Maryland 529 plan.
Lawmakers Demand to Abolish Tax Penalties for Maryland 529 Plan Beneficiaries Following Accounting Error
Following the issues, lawmakers demanded to abolish tax penalties for the beneficiaries of the Maryland 529 plan because of the accounting error that led to some accounts being frozen, Best Colleges reported.
The demand for the abolishment was a demand for fairness for thousands of Maryland 529 plan beneficiaries struggling with their K-12 or college expenses, including tuition fees.