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Facts About Arkansas' 529 Plan

By    |   Wednesday, 20 May 2015 10:31 AM

Families with children facing the ever rising cost of higher education may feel college is out of reach. But there is help out there in the form of state-specific 529 plans, and Arkansas has two, one it is showcasing during summer, 2015.

The 529 tax-advantaged savings plan is authorized by the IRS to encourage people to save for future college costs.

These plans, legally known as "qualified tuition plans," are sponsored by states, state agencies or educational institutions and differ from one state to the next on what they offer and entail.

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Additionally, 529 plans come in two forms: pre-paid tuition plans and college savings plans. Every state and the District of Columbia sponsor at least one type of 529 plan, as do private colleges and universities.

Over the next few months Arkansas is calling attention to its Great Investment For Tomorrow program, known as the GIFT 529 College Investment Plan. Here are some facts about how the GIFT 529 College Investment Plan can help you.

1. Arkansas offers a "GIFT 529 College Investment Plan,"
and this summer will be giving away $529 in every county to raise awareness of the program, according to the Cleveland County Herald. Investing in a 529 plan may offer college savers special tax benefits, as they are not subject to federal tax — and in most cases state tax, so long as withdrawals are used for eligible college expenses such as tuition and room and board.

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2. In this version of the 529 plan participants control their own plans, which are managed by an outside investment group, The Vanguard Group Inc. The minimum investment the account holder must make is $25 within six months of opening the account, and Arkansas 529 plans grow tax-free.

3. These plans can be used to pay for two- and four-year colleges as well as vocational and trade schools. They also can be used to pay for graduate school. On the state level, as long as the 529 funds are used for educational expenses, contributions to the plan are 100 percent tax deductible for up to $5,000 per year for an individual, and up to $10,000 per year for a couple. Arkansas' GIFT program can be put toward any accredited institution in the nation.

4. The second plan offered by Arkansas is the iShares 529 advisor-sold plan from BlackRock. It is of iShares ETFs and has a 7-year enrollment portfolio, 4 asset allocation options and 17 individual portfolios that can be mixed or used independently of each other, according to savingforcollege.com.The cap set for each individual plan is $366,000 with a minimum contribution of $500 and $50 following installments, but can drop to $25 for gift contributions through the plan's Ugift feature. This option also can be linked to the Upromise rewards service.

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Families with children facing the ever rising cost of higher education may feel college is out of reach. But there is help out there in the form of state-specific 529 plans, and Arkansas has two, one it is showcasing during summer, 2015.
529 plan, facts, arkansas
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2015-31-20
Wednesday, 20 May 2015 10:31 AM
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