On December 22, 2017, the president signed new tax legislation into law. We're working on updating our website to reflect the new U.S. tax laws. In the meantime, the website may not address the changes. The legislation includes several new provisions related specifically to 529 plan accounts. We'll provide more information as additional details about the effects of the tax bill become clear. We encourage you to consult a qualified tax advisor about your personal situation.
Myth: Money in an Arkansas 529 GIFT Plan account can only be used at schools in Arkansas.
Truth: You can use the assets in your Arkansas 529 GIFT Plan account at any eligible 2- and 4-year college, graduate school (including law and medical), and vocational/technical school.1
Myth: You can only use a 529 plan account to pay for college tuition.
Truth: You can use your Arkansas 529 GIFT Plan account assets for many qualified higher education expenses, including tuition, fees, and certain room and board costs.2
Myth: It costs a lot to open and maintain a 529 plan account.
Truth: Open an Arkansas 529 GIFT Plan account with as little as $10 a month (or $30 per quarter) with recurring contributions (an automatic investment plan)3 or a one-time contribution of $25. You can also set up payroll direct deposit with a $5 minimum per pay period.3
Myth: You have to make a lot of investment decisions.
Truth: With the Arkansas 529 GIFT Plan, you can be as hands-on or hands-off as you want to be. You can choose from a lower-risk, FDIC-insured GIFT Plan Savings Portfolio; Age-Based Portfolios that automatically adjusts its investments as your child nears college; or Custom Portfolios that help you match your goals and risk tolerance to the appropriate investment mix.
Myth: It's too late to start a 529 plan account.
Truth: Even if your student is already in high school, you can benefit from a 529 plan. Earnings grow federal tax-deferred, and when you withdraw the money for a qualified higher education expense, it's federal tax free.2 Any assets not used may even be rolled over to another eligible family member.
Myth: If your child doesn’t go to college, you lose your money.
Truth: The 529 plan account owner controls the account. So you can change your beneficiary to another eligible "member of the family" (as per IRS rules) with no tax penalty.
Myth: It's difficult to open a 529 plan account.
Truth: It's fast and easy to enroll online.
Myth: It's expensive to save for college.
Truth: With the Arkansas GIFT 529 Plan, it's easy and affordable. Total annual asset-based Arkansas 529 GIFT Plan fees are 0.57% (0.55% for the GIFT Plan Savings Portfolio). For example, if you invest $1,000, the annual fee would be just $5.70 ($5.50 for the GIFT Plan Savings Portfolio). All non-resident accounts are charged an annual account fee of $20; that fee is waived if the designated beneficiary or account owner is a resident of Arkansas.
1An eligible institution is one that can participate in federal financial aid programs.
2Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to 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.
3A plan of periodic investment does not assure a profit or protect against a loss in declining markets.