Treasurer Announces Retroactive 6% Earnings Rate For Prepaid College Trust

By WMAR2NEWS
Posted on 07/11/23 | News Source: WMAR2NEWS

Please note: The article below specifically refers to the "Prepaid College Trust" and not the "College Investment Program' that many individuals in our community have utilized

Baltimore, MD - Jul 11, 2023  - Maryland State Treasurer Dereck Davis announced a retroactive 6% earnings rate for account holders of the Maryland Prepaid College Trust.

The State Treasurer's Office assumed responsibility for Maryland 529 and its programs on June 1.

Based on the most available data to date, Treasurer Davis announced the following:

• For contributions in an account prior to November 1, 2021, the annual earnings rate will be 6% compounded monthly, applied retroactively to the date of contribution and effective until the earlier of: 1) the date the earnings rate is set to zero as described below, 2) the date benefits are withdrawn, or 3) the date of contract termination. This earnings rate decision only applies to accounts that were open and active in the automated record keeping system on November 1, 2021.
• For contributions that posted to an account on or after November 1, 2021, the annual earnings rate will be rate equal to the 10-year Treasury note, compounded monthly, and effective until the earlier of 1) the date the earnings rate is set to zero as described below, 2) the date benefits are withdrawn, or 3) the date of contract termination.
• Beginning on a date no later than July 1, 2024, all contributions and all balances in an account will earn zero percent interest. Account holders will be notified at least 60 days prior to the date this change becomes effective.

Claims will not need to be filed to receive these earnings, as they will appear in accounts as soon as the system is updated.
The decision to change the earnings rate to zero percent will come no later than July 1, 2024, and is applicable to all accounts.

Since Treasurer Davis knew he was taking over Maryland 529, his office started working with current employees and the board to figure out what the issue was.

He found a miscommunication over when interest payments would increase between the board and either the staff or the vendor.