The Arkansas 529 Education Savings Plan has reached $1 billion in assets, Treasurer of State Dennis Milligan told the 529 board Tuesday (Aug. 25).
“When I took office in 2015, I made promoting the Arkansas 529 plan a priority,” Milligan said. “We had $568 million in assets and today, just five-and-a-half years later, we’re at $1 billion. For a plan that began in Arkansas in 1999, this type of growth is just phenomenal.”
The Arkansas 529 plan began in 1999 but wasn’t moved under the purview of the Treasurer’s Office until 2003. It was initially a direct-sold plan sponsored by the state; however, in 2007, the plan’s advisory board opened it up for financial advisors to sell as well.
The Arkansas 529 plan is an education-savings account that offers parents up to $10,000 in state tax deductions for their contributions. They are then able to use the money for a variety of expenses to further their child’s education, whether it be at a traditional four-year university or a technical or trade school.
Milligan said there has been a 77% increase in growth in the plan since he took office. He credits marketing the plan to the public for its expansion.
“We have taken a plan that few people knew existed and have turned it into a household name in just five years,” Milligan said. “We began heavily promoting the Arkansas 529 plan during my first year in office, and because of that, we’ve seen consistent growth each year.”
Through legislative updates, the program has added several tax benefits to make it more attractive for investment. The additional benefits include:
· Creating a tax deduction for businesses that wish to match their employees’ contributions;
· Allowing those who are able to contribute up to $50,000 in a single year and carry the $10,000 tax deduction toward the forthcoming four years;
· Expanding the plan to include K-12 tuition and widening the list of qualifying expenses for which the money can be used; and
· Introducing a $7,500 tax incentive for people with out-of-state plans when they roll them over into the Arkansas plan.
Milligan said there will need to be additional updates to comply with federal changes in the 2021 legislative session. One update will allow 529 account owners to use 529 funds to pay student loan debt.
For more information about the Arkansas 529 Education Savings Plan, visit www.arkansas529.org or call (501) 682-1406.