Get answers to frequently asked questions

Maryland’s new state-sponsored retirement savings program is open right now. It was created to help nearly one million Marylanders who work but don’t have access to employer-sponsored retirement plans. We understand you’ll have questions. Here are the answers to some frequently asked questions. If you have additional questions, we’re here to help.

Is my contribution pre-tax or post-tax?

Contributions to WorkLife Accounts are made on a post-tax basis. The percentage contributed is based on your gross income earned (the amount you make before any taxes or deductions have been taken out) with your facilitating employer. If you also contribute to a Traditional IRA, those contributions may be deductible on your tax return. It may be best to consult with a tax professional to determine what you can or cannot deduct.

Will MarylandSaves contributions show up on my W2?

No. Instead, both you and the IRS will receive a different form, Form 5498, no later than May 31. You do not need to file this form with your taxes, but you should keep it with your tax records as documentation of your contributions for a particular tax year.

Is the contribution rate based on gross or net income?

Your contribution rate is based on your gross income (total income before taxes and other regular deductions are taken).

How much am I allowed to save each year in MarylandSaves?

Contribution limits for IRAs are set by the federal government. For 2024, you can save up to $7,000 per year if you’re younger than 50 and $8,000 per year if you’re 50 or older, as long as you have earned at least that much. This contribution limit applies across all IRAs you may have (both Traditional IRAs and Roth IRAs with the State and elsewhere). Your MarylandSaves Account will automatically stop accepting contributions if you go above the limits in any year. 

If you are contributing to a Roth IRA, you also need to meet certain income levels based on your modified adjusted gross income (MAGI). See this publication from the IRS for more information about how your Modified Adjusted Gross Income determines how much you are able to contribute to your Roth IRA account.

Is there a maximum amount or percentage of income that can be contributed?

There is no upper limit on the percentage of income that can be contributed; however, IRAs have annual dollar contribution limits. For 2024, the contribution limits are $7,000 per year ($8,000 per year if you are age 50 or older), as long as you earn at least $7,000 in wages. Roth IRA contributions may be further limited by your income if it is above certain limits. Click here for more information about the limits of Roth IRA contributions that you can make for 2024.

Can I make withdrawals?

The simple answer: Yes, if and when you need to take money from your account, you can simply make a withdrawal. However, in some instances you should understand that there could be a small cost that you will pay on your next year’s tax return. MarylandSaves itself doesn’t charge any administrative fee for withdrawals.

Your WorkLife Account is legally a Roth Individual Retirement Account. It was designed to help you save for retirement over the long term so in many cases there are tax costs for using it before you retire. For these reasons, investment earnings that you take out before age 59½ and before you’ve had your Roth IRA for five years will be taxable and subject to ten percent penalty. These costs are not large: For example, if you withdraw $100 from your Emergency Savings Fund you could expect to pay approximately about 44¢ in penalties and taxes. You may wish to consult a tax advisor to be sure you understand the impact of any withdrawals you make. You can get more details here.

Are there additional withdrawal restrictions beyond normal Roth IRA restrictions?

No. The only withdrawal restrictions for MarylandSaves IRAs are those set by the federal government for any Roth or Traditional IRA. If you’re concerned, you can consult with a tax expert or financial advisor.

Can I transfer my MarylandSaves money into another retirement savings account?

Money in your Roth IRA can be transferred or rolled into another Roth IRA only. You should consult with a tax expert or financial advisor first.

Will Maryland state income tax be withheld from my Roth IRA withdrawals?

If you are a resident in the state, Maryland income tax withholding applies only to the taxable portion of IRA distributions. Therefore, if your withdrawal is a qualified distribution there will be no income tax withheld. If your withdrawal is not a qualified distribution, then a minimum of 7.75% of the taxable portion (the earnings) will be withheld in the state of Maryland, but you may claim an exemption from withholding, if eligible, or you may elect to have an additional amount withheld, by completing and submitting Form MW507P.

How long will it take to receive my money?

Please allow up to 3-5 business days. Distributions will generally be processed within 3 business days of your request. During periods of market volatility and at year-end, distribution requests may take up to 5 business days. For security purposes, there will be a hold of 15 calendar days when there is a change to your address, and a hold of 15 calendar days following a change to your banking information. Distributions of contributions made by check or ACH will not be available for withdrawal for 5 business days.