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Tax Law Information

On December 22, 2017, the president signed new tax legislation into law. The following describes several new provisions related specifically to 529 plan accounts, beginning with the 2018 tax year.

  • Effective January 1, 2018 savings, up to $10,000 per tax year per beneficiary, in the aggregate from all 529 plan accounts held for the same beneficiary, may be withdrawn and used for expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school (K-12 Tuition Expenses) without incurring federal income tax on the earnings portion of the withdrawal.
  • Earnings on withdrawals of up to $10,000 per tax year per beneficiary from your Arkansas Brighter Future Direct Plan account used for K-12 Tuition Expenses will also be free of Arkansas state income tax. If you are not an Arkansas taxpayer, the state(s) where you pay income tax may differ in its state income tax treatment of K-12 Tuition Expenses. It is the account owner’s responsibility to ensure that distributions for K-12 Tuition Expenses do not exceed the limit for a beneficiary. You should consult with a tax advisor regarding your individual situation.
  • Rollovers from an Arkansas Brighter Future Direct Plan account into an Achieving a Better Life Experience (ABLE) account for the same designated beneficiary (or to another beneficiary who is a Member of the Family) will not be subject to federal income tax, Arkansas state income tax, or the annual contribution limits for ABLE accounts. Amounts withdrawn from an Arkansas Brighter Future Direct Plan account may be treated as a rollover to an ABLE account for federal and Arkansas state income tax purposes if the amount withdrawn is re-deposited within 60 days into an ABLE account, subject to the limitations in the immediate preceding sentence. If you are not an Arkansas taxpayer, the state(s) where you pay income tax may differ in its state income tax treatment of rollovers from 529 plans to ABLE plans. You should consult your tax advisor regarding your individual situation, including whether to rollover to an ABLE account.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.