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529 plans were established to help parents and grandparents save money for college. In fact, the name "529" refers to the Internal Revenue Code section that discusses this type of college savings tool.

While there are other types of college saving vehicles, 529 plans offer several features that can help families keep pace with the rising cost of a college degree.

Tax-deferred growth

With a 529 account, your savings has the potential to grow at a faster rate than if you had invested in a comparable taxable account. That’s because, unlike a conventional investment, your 529 growth is not taxable year after year.


Assumptions: $2,500 initial investment with subsequent monthly investments of $100 for a period of 18 years; annual rate of return on investment of 5% and no funds withdrawn during the time period specified; taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and distribution. This hypothetical is for illustrative purposes only. It does not reflect an actual investment in any particular 529 plan or any taxes that may be payable upon distribution.

Tax-free qualified withdrawals

Once your child reaches college age, withdrawals for qualified higher education expenses are free from federal income tax. That way, more of your savings goes toward paying for college rather than taxes.1

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$10,000 per tax year per beneficiary, in the aggregate from all 529 plan accounts held for the same beneficiary, may be withdrawn and used for expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school (K-12 Tuition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.

Earnings on withdrawals up to $10,000 per tax year per beneficiary from your Arkansas 529 GIFT 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. Learn More

Estate and gift tax advantages2

You can contribute up to $15,000 (up to $30,000 for married couples) per designated beneficiary each year, without incurring federal gift tax consequences. You can even contribute up to $75,000 per designated beneficiary in a single year (up to $150,000 for married couples) by taking advantage of five years' worth of federal tax-free gifts at one time.2

Arkansas state tax deduction3

Are you an Arkansas taxpayer? Then you can deduct up to $5,000 (up to $10,000 for married couples) of your Arkansas 529 GIFT Plan contributions from your Arkansas adjusted gross income, with any unused excess contribution in a tax year being carried over to the next succeeding four tax years, beginning January 1, 2017.

1Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

2The gift will be prorated over five years. In the event the donor does not survive the five-year period, a prorated amount will revert back to the donor's taxable estate.

3Contributions to the GIFT Plan in a tax year are deductible from Arkansas state income tax, subject to recapture in subsequent years in which a non-qualified withdrawal or a rollover out to another state's 529 plan is made.

Ascensus Broker Dealer Services is the distributor of The Arkansas 529 GIFT Plan, Learn more about Ascensus Broker Dealer Services, LLC on FINRA's BrokerCheck FINRA's BrokerCheck.

For more information about the GIFT College Investing Plan (the "GIFT Plan"), call 1.800.587.7301 or visit www.thegiftplan.com to obtain a Program Description and Participation Agreement, which includes investment objectives, risks, charges, expenses and other information; read and consider it carefully before making an investment or sending money. Ascensus Broker Dealer Services, LLC ("ABD") is the Distributor of the GIFT Plan.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You should also consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 college savings plan(s), or any other 529 plan, to learn more about those plans’ features, benefits, and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The GIFT Plan is a college tuition savings program sponsored by the State of Arkansas and administered by the Arkansas Section 529 Plan Review Committee ("Committee"). ABD, the Program Manager, and its affiliates have overall responsibility for the day-to-day operations, including investment advisory services, recordkeeping, administrative services and marketing of the GIFT Plan. The GIFT Plan's Portfolios invest in: (i) mutual funds; or (ii) an FDIC-insured omnibus savings account held in trust by the Committee at Sallie Mae Bank. Except for the GIFT Plan Savings Portfolio, investments in the GIFT Plan are not insured by the FDIC. Units of the Portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the GIFT Plan Portfolios you choose. Except to the extent of FDIC insurance available for the GIFT Plan Savings Portfolio, you could lose all or a portion of your money by investing in the GIFT Plan, depending on market conditions. Account Owners assume all investment risks as well as responsibility for any federal and state tax consequences.

Not FDIC-Insured (except for the GIFT Plan Savings Portfolio). No Bank, State or Federal Guarantee. May Lose Value.