Stricken language would be deleted from and underlined language would be added to present law.
*JLL079* 12/17/2024 8:02:44 AM JLL079
State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1085 3
4
By: Representative K. Brown 5
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For An Act To Be Entitled 8
AN ACT TO AMEND THE ARKANSAS BRIGHTER FUTURE FUND 9
PLAN ACT; TO ADOPT CHANGES IN FEDERAL LAW CONCERNING 10
TAX-DEFERRED TUITION SAVINGS PROGRAMS; TO AMEND THE 11
LAW CONCERNING INCOME TAX LIABILITY FOR DISTRIBUTIONS 12
FROM AN ARKANSAS BRIGHTER FUTURE FUND PLAN OR OTHER 13
TAX-DEFERRED TUITION SAVINGS PROGRAM TO A ROTH 14
INDIVIDUAL RETIREMENT ACCOUNT; TO ADOPT FEDERAL LAW 15
CONCERNING THE INCOME TAX TREATMENT OF ROLLOVER 16
CONTRIBUTIONS FROM AN ARKANSAS BRIGHTER FUTURE FUND 17
PLAN OR OTHER TAX-DEFERRED TUITION SAVINGS PROGRAM TO 18
A ROTH INDIVIDUAL RETIREMENT ACCOUNT; AND FOR OTHER 19
PURPOSES. 20
21
22
Subtitle 23
TO ADOPT FEDERAL LAW CONCERNING TAX -24
DEFERRED TUITION SAVINGS PROGRAMS; AND 25
TO AMEND THE INCOME TAX LIABILITY FOR 26
ROLLOVER CONTRIBUTIONS FROM AN ARKANSAS 27
BRIGHTER FUTURE FUND PLAN TO A ROTH 28
INDIVIDUAL RETIREMENT ACCOUNT. 29
30
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 31
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SECTION 1. Arkansas Code § 6 -84-102 is amended to read as follows: 33
6-84-102. Purpose. 34
It is the intent and purpose of this chapter to create and establish 35
the Arkansas Brighter Future Fund Plan pursuant to 26 U.S.C. § 529, as in 36 HB1085
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effect on January 1, 2020 2024, to be administered by the Section 529 Plan 1
Review Committee through the adoption of rules for the administration of the 2
plan. 3
4
SECTION 2. Arkansas Code § 6 -84-103(5) and (6), concerning the 5
definitions used under the Arkansas Brighter Future Fund Plan Act, are 6
amended to read as follows: 7
(5) “Committee” means the Section 529 Plan Review Committee, 8
provided for in § 6-84-105, which shall oversee the administration of the 9
Arkansas Brighter Future Fund Plan and ensure that the plan complies with the 10
provisions of this chapter and acts in accordance with 26 U.S.C. § 529, as in 11
effect on January 1, 2020 2024; 12
(6) “Contribution” means: 13
(A) Any payment directly allocated to an account for the 14
benefit of a designated beneficiary or used to pay administrative fees 15
associated with an account; and 16
(B) That portion of any rollover amount treated as a 17
contribution under 26 U.S.C. § 529, as in effect on January 1, 2020 2024; 18
19
SECTION 3. Arkansas Code § 6 -84-103(10), concerning the definitions 20
used under the Arkansas Brighter Future Fund Plan Act, is amended to read as 21
follows: 22
(10) “Member of the family” shall have the same meaning as is 23
contained in 26 U.S.C. § 529, as in effect on January 1, 2020 2024; 24
25
SECTION 4. Arkansas Code § 6 -84-103(12), concerning the definitions 26
used under the Arkansas Brighter Future Fund Plan Act, is amended to read as 27
follows: 28
(12) “Person” means a person as defined in 26 U.S.C. § 529, as 29
in effect on January 1, 2020 2024; 30
31
SECTION 5. Arkansas Code § 6 -84-103(14) and (15), concerning the 32
definitions used under the Arkansas Brighter Future Fund Plan Act, are 33
amended to read as follows: 34
(14) “Qualified higher education expenses” means tuition and 35
other permitted expenses as set forth in 26 U.S.C. § 529, as in effect on 36 HB1085
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January 1, 2020 2024, for the enrollment or attendance of a designated 1
beneficiary; 2
(15) “Qualified tuition program” means a qualified tuition 3
program as defined in 26 U.S.C. § 529, as in effect on January 1, 2020 2024; 4
5
SECTION 6. Arkansas Code § 6 -84-103(17), concerning the definitions 6
used under the Arkansas Brighter Future Fund Plan Act, is amended to read as 7
follows: 8
(17) “Rollover” means a disbursement or transfer from an account 9
that is transferred to or deposited within sixty (60) calendar days of the 10
transfer: 11
(A) Into an account of the same person for the benefit of 12
the same designated beneficiary; 13
(B) To the credit of another person as a designated 14
beneficiary if the transferee account was created under this chapter or under 15
another qualified tuition program maintained in accordance with 26 U.S.C. § 16
529, as in effect on January 1, 2020 2024; or 17
(C)(i) Before January 1, 2026, into an ABLE account under 18
26 U.S.C. § 529A(e)(6), as in effect on January 1, 2020 2024, of the 19
designated beneficiary or a member of the family of the designated 20
beneficiary. 21
(ii) Subdivision (17)(C)(i) of this section does not 22
apply to so much of a distribution which, when added to all other 23
contributions made to the ABLE account for the taxable year, exceeds the 24
limitation under 26 U.S.C. § 529A(b)(2)(B)(i), as in effect on January 1, 25
2020 2024. 26
27
SECTION 7. Arkansas Code § 6 -84-103, concerning the definitions used 28
under the Arkansas Brighter Future Fund Plan Act, is amended to add an 29
additional subdivision to read as follows: 30
(18) "Rollover to Roth individual retirement account" means a 31
direct trustee-to-trustee transfer from an account on or after January 1, 32
2024, to a Roth individual retirement account for the benefit of the 33
designated beneficiary that qualifies as a tax -free distribution under 26 34
U.S.C. § 529(c)(3)(E), as in effect on January 1, 2024. 35
36 HB1085
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SECTION 8. Arkansas Code § 6 -84-105(b), concerning the administration 1
of the Arkansas Brighter Future Fund Plan Act and the powers and duties of 2
the Section 529 Plan Review Committee, is amended to read as follows: 3
(b) The committee shall adopt such rules as it deems necessary and 4
proper to administer this chapter and to ensure the compliance of the 5
Arkansas Brighter Future Fund Plan with 26 U.S.C. § 529, as in effect on 6
January 1, 2020 2024. 7
8
SECTION 9. Arkansas Code § 6 -84-105(c)(1), concerning the powers and 9
duties of the Section 529 Plan Review Committee under the Arkansas Brighter 10
Future Fund Plan Act, is amended to read as follows: 11
(1) To establish, develop, implement, and maintain the plan in a 12
manner consistent with the provisions of this chapter and 26 U.S.C. § 529, as 13
in effect on January 1, 2020 2024, and to obtain the benefits provided by 26 14
U.S.C. § 529 for the plan, account owners, and designated beneficiaries; 15
16
SECTION 10. Arkansas Code § 6 -84-106 is amended to read as follows: 17
6-84-106. Investment direction. 18
Except as permitted in 26 U.S.C. § 529, as in effect on January 1, 2020 19
2024, no person shall have the right to direct the investment of any 20
contributions to or earnings from the Arkansas Brighter Future Fund Plan. 21
22
SECTION 11. Arkansas Code § 6 -84-108(b), concerning the naming of a 23
designated beneficiary and transfers of accounts under the Arkansas Brighter 24
Future Fund Plan Act, is amended to read as follows: 25
(b) At the direction of an account owner, all or a portion of an 26
account may be transferred to another account of which the designated 27
beneficiary is a member of the family of the designated beneficiary of the 28
transferee account if the transferee account was created by this chapter or 29
under another qualified tuition program maintained in accordance with 26 30
U.S.C. § 529, as in effect on January 1, 2020 2024. 31
32
SECTION 12. Arkansas Code § 6 -84-109(b)(2), concerning account 33
withdrawals under the Arkansas Brighter Future Fund Plan Act, is amended to 34
read as follows: 35
(2) The report shall be made at the time required by the rules 36 HB1085
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of the Internal Revenue Service as in effect on January 1, 2020 2024 and 1
contain such information as is required by law. 2
3
SECTION 13. Arkansas Code § 6 -84-111(a)(1), concerning funds exempt 4
from tax under the Arkansas Brighter Future Fund Plan Act, is amended to read 5
as follows: 6
(a)(1) Except as otherwise indicated in this chapter, interest, 7
dividends, and capital gains from funds invested in the Arkansas Brighter 8
Future Fund Plan or a tax -deferred tuition savings program established by 9
another state under 26 U.S.C. § 529, as in effect on January 1, 2020 2024, 10
shall be exempt from Arkansas income taxes. 11
12
SECTION 14. Arkansas Code § 6 -84-111(b)(3), concerning funds exempt 13
from tax under the Arkansas Brighter Future Fund Plan Act, is amended to read 14
as follows: 15
(3) Contributions to this plan that have been deducted from the 16
taxpayer employee's adjusted gross income for prior tax years shall be 17
subject to recapture from the taxpayer employee if the taxpayer employee: 18
(A) Makes a subsequent nonqualified withdrawal from the 19
account; or 20
(B) Rolls the account over to a tax -deferred tuition 21
savings program established by another state or institution under 26 U.S.C. § 22
529, as in effect on January 1, 2020 2024. 23
24
SECTION 15. Arkansas Code § 6 -84-111(c)-(g), concerning funds exempt 25
from tax under the Arkansas Brighter Future Fund Plan Act, are amended to 26
read as follows: 27
(c)(1)(A) For tax years beginning on or after January 1, 2017, 28
contributions to a tuition savings account established under this plan or a 29
tax-deferred tuition savings program established by another state under 26 30
U.S.C. § 529, as it existed on January 1, 2017 2024, may be deducted from the 31
taxpayer's adjusted gross income for the purpose of calculating Arkansas 32
income tax under § 26 -51-403(b). 33
(B) A taxpayer may not deduct from the taxpayer's adjusted 34
gross income a contribution to a tax -deferred tuition savings program 35
established by another state if the taxpayer deducted the contribution in 36 HB1085
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another state or on another state's income taxes. 1
(2)(A) The deductible contributions for a tuition savings 2
account established under this chapter shall not exceed five thousand dollars 3
($5,000) per taxpayer in any tax year. 4
(B) If the aggregate amount of contributions by a taxpayer 5
during a tax year exceeds the limitation under subdivision (c)(2)(A) of this 6
section, the unused aggregate amount may be carried forward to the next 7
succeeding four (4) tax years. 8
(C) The deductible contributions for a tax -deferred 9
tuition savings program established by another state under 26 U.S.C. § 529, 10
as it existed on January 1, 2017 2024, shall not exceed three thousand 11
dollars ($3,000) per taxpayer in any tax year. 12
(D) The deductible contributions for a tax -deferred 13
tuition savings program established by another state under 26 U.S.C. § 529, 14
as it existed on January 1, 2017 2024, that are rolled over into a tuition 15
savings account established under this chapter shall not exceed seven 16
thousand five hundred dollars ($7,500) per taxpayer in the tax year in which 17
they were rolled over. 18
(d)(1)(A) For tax years beginning on or after January 1, 2018, 19
contributions to a tuition savings account established under the plan or a 20
tax-deferred tuition savings program established by another state under 26 21
U.S.C. § 529, as it existed on January 1, 2018 2024, may be deducted from 22
the taxpayer's adjusted gross income for the purpose of calculating Arkansas 23
income tax under § 26 -51-403(b). 24
(B) A taxpayer may not deduct from the taxpayer's adjusted 25
gross income a contribution to a tax -deferred tuition savings program 26
established by another state if the taxpayer deducted the contribution in 27
another state or on another state's income taxes. 28
(2)(A) The deductible contributions for a tuition savings 29
account established under this chapter shall not exceed five thousand dollars 30
($5,000) per taxpayer in any tax year. 31
(B) If the aggregate amount of contributions by a taxpayer 32
during a tax year exceeds the limitation under subdivision (d)(2)(A) of this 33
section, the unused aggregate amount may be carried forward to the next 34
succeeding four (4) tax years. 35
(C) The deductible contributions for a tax -deferred 36 HB1085
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tuition savings program established by another state under 26 U.S.C. § 529, 1
as it existed on January 1, 2018 2024, shall not exceed three thousand 2
dollars ($3,000) per taxpayer in any tax year. 3
(D) The deductible contributions for a tax -deferred 4
tuition savings program established by another state under 26 U.S.C. § 529, 5
as it existed on January 1, 2018 2024, that are rolled over into a tuition 6
savings account established under this chapter shall not exceed seven 7
thousand five hundred dollars ($7,500) per taxpayer in the tax year in which 8
they were rolled. 9
(e)(1)(A) For tax years beginning on and after January 1, 2021, 10
contributions to a tuition savings account established under the plan or a 11
tax-deferred tuition savings program established by another state under 26 12
U.S.C. § 529, as in effect on January 1, 2020 2024, may be deducted from the 13
taxpayer's adjusted gross income for the purpose of calculating Arkansas 14
income tax under § 26 -51-403(b). 15
(B) A taxpayer may not deduct from the taxpayer's adjusted 16
gross income a contribution to a tax -deferred tuition savings program 17
established by another state if the taxpayer deducted the contribution in 18
another state or on another state's income taxes. 19
(2)(A) The deductible contributions for a tuition savings 20
account established under this chapter shall not exceed five thousand dollars 21
($5,000) per taxpayer in any tax year. 22
(B) If the aggregate amount of contributions by a taxpayer 23
during a tax year exceeds the limitation under subdivision (e)(2)(A) of this 24
section, the unused aggregate amount may be carried forward to the next 25
succeeding four (4) tax years. 26
(C) The deductible contributions for a tax -deferred 27
tuition savings program established by another state under 26 U.S.C. § 529, 28
as in effect on January 1, 2020 2024, shall not exceed three thousand dollars 29
($3,000) per taxpayer in any tax year. 30
(D) The deductible contributions for a tax -deferred 31
tuition savings program established by another state under 26 U.S.C. § 529, 32
as in effect on January 1, 2020 2024, that are rolled over into a tuition 33
savings account established under this chapter shall not exceed seven 34
thousand five hundred dollars ($7,500) per taxpayer in the tax year in which 35
they were rolled over. 36 HB1085
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(f)(1) Qualified withdrawals , rollovers, and rollovers to a Roth 1
individual retirement account from a tuition savings account established 2
under this plan or a tax -deferred tuition savings program established by 3
another state under 26 U.S.C. § 529, as in effect on January 1, 2020 2024, 4
will be exempt from Arkansas income tax with respect to the designated 5
beneficiary's income. 6
(2)(A) Nonqualified withdrawals from a tuition savings account 7
established under this plan or a tax -deferred tuition savings program 8
established by another state under 26 U.S.C. § 529, as in effect on January 9
1, 2020 2024, will be subject to Arkansas income tax. 10
(B) The nonqualified withdrawal will be taxable to the 11
party, account owner, or designated beneficiary who actually makes the 12
withdrawal. 13
(g) Any earnings on the contribution that are included in the refund 14
will be subject to Arkansas income tax if an account owner receives a refund 15
of contributions to a tuition savings account established under this plan or 16
a tax-deferred tuition savings program established by another state under 26 17
U.S.C. § 529, as in effect on January 1, 2020 2024, because of either: 18
(1) The death or disability of the designated beneficiary; or 19
(2) A scholarship, allowance, or payment described in 26 U.S.C. 20
§ 135(d)(1)(B) or (d)(1)(C), as in effect on January 1, 2018, received by the 21
designated beneficiary. 22
23
SECTION 16. Arkansas Code § 6 -84-113 is amended to read as follows: 24
6-84-113. Liberal construction. 25
This chapter shall be liberally construed to comply with the 26
requirements of 26 U.S.C. § 529, as in effect on January 1, 2020 2024. 27
28
SECTION 17. Arkansas Code § 26 -51-414(b), concerning the tax treatment 29
of deferred compensation plans, is amended to read as follows: 30
(b) Title 26 U.S.C. § 408A as in effect on January 1, 2010, relating 31
to Roth individual retirement accounts, is adopted for the purpose of 32
computing Arkansas income tax liability, except with regard to : adjusted 33
(1) Adjusted gross income under 26 U.S.C. § 408A(c)(3), which 34
shall be determined in the same manner as under § 26 -51-403(b); and 35
(2) Rollover contributions from a tuition savings account 36 HB1085
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established under the Arkansas Brighter Future Fund Plan Act, § 6 -84-101 et 1
seq., or a tax-deferred tuition savings program established by another state 2
under 26 U.S.C. § 529, as in effect on January 1, 2024, which shall be 3
treated as provided in 26 U.S.C. § 408A(c)(3)(E), § 408A(c)(5), and § 4
408A(e)(1), as they existed on December 29, 2022 . 5
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SECTION 18. EFFECTIVE DATE. Sections 1 -17 of this act are effective 7
for tax years beginning on or after January 1, 2024. 8
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