AR
Arkansas House Bill HB1085

Arkansas 2025 Regular Session

Arkansas House Bill HB1085 Compare Versions

OldNewDifferences
11 Stricken language would be deleted from and underlined language would be added to present law.
2-Act 802 of the Regular Session
3-*JLL079* 01-29-2025 08:59:59 JLL079
4-
5-State of Arkansas As Engrossed: H1/29/25 1
2+*JLL079* 12/17/2024 8:02:44 AM JLL079
3+State of Arkansas 1
64 95th General Assembly A Bill 2
75 Regular Session, 2025 HOUSE BILL 1085 3
86 4
97 By: Representative K. Brown 5
10-By: Senator J. English 6
8+ 6
119 7
1210 For An Act To Be Entitled 8
1311 AN ACT TO AMEND THE ARKANSAS BRIGHTER FUTURE FUND 9
1412 PLAN ACT; TO ADOPT CHANGES IN FEDERAL LAW CONCERNING 10
1513 TAX-DEFERRED TUITION SAVINGS PROGRAMS; TO AMEND THE 11
1614 LAW CONCERNING INCOME TAX LIABILITY FOR DISTRIBUTIONS 12
1715 FROM AN ARKANSAS BRIGHTER FUTURE FUND PLAN OR OTHER 13
1816 TAX-DEFERRED TUITION SAVINGS PROGRAM TO A ROTH 14
1917 INDIVIDUAL RETIREMENT ACCOUNT; TO ADOPT FEDERAL LAW 15
2018 CONCERNING THE INCOME TAX TREATMENT OF ROLLOVER 16
2119 CONTRIBUTIONS FROM AN ARKANSAS BRIGHTER FUTURE FUND 17
2220 PLAN OR OTHER TAX-DEFERRED TUITION SAVINGS PROGRAM TO 18
2321 A ROTH INDIVIDUAL RETIREMENT ACCOUNT; AND FOR OTHER 19
2422 PURPOSES. 20
2523 21
2624 22
2725 Subtitle 23
2826 TO ADOPT FEDERAL LAW CONCERNING TAX -24
2927 DEFERRED TUITION SAVINGS PROGRAMS; AND 25
3028 TO AMEND THE INCOME TAX LIABILITY FOR 26
3129 ROLLOVER CONTRIBUTIONS FROM AN ARKANSAS 27
3230 BRIGHTER FUTURE FUND PLAN TO A ROTH 28
3331 INDIVIDUAL RETIREMENT ACCOUNT. 29
3432 30
3533 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 31
3634 32
3735 SECTION 1. Arkansas Code § 6 -84-102 is amended to read as follows: 33
3836 6-84-102. Purpose. 34
3937 It is the intent and purpose of this chapter to create and establish 35
40-the Arkansas Brighter Future Fund Plan pursuant to 26 U.S.C. § 529, as in 36 As Engrossed: H1/29/25 HB1085
38+the Arkansas Brighter Future Fund Plan pursuant to 26 U.S.C. § 529, as in 36 HB1085
4139
42- 2 01-29-2025 08:59:59 JLL079
43-
44-
40+ 2 12/17/2024 8:02:44 AM JLL079
4541 effect on January 1, 2020 2024, to be administered by the Section 529 Plan 1
4642 Review Committee through the adoption of rules for the administration of the 2
4743 plan. 3
4844 4
4945 SECTION 2. Arkansas Code § 6 -84-103(5) and (6), concerning the 5
5046 definitions used under the Arkansas Brighter Future Fund Plan Act, are 6
5147 amended to read as follows: 7
5248 (5) “Committee” means the Section 529 Plan Review Committee, 8
5349 provided for in § 6-84-105, which shall oversee the administration of the 9
5450 Arkansas Brighter Future Fund Plan and ensure that the plan complies with the 10
5551 provisions of this chapter and acts in accordance with 26 U.S.C. § 529, as in 11
5652 effect on January 1, 2020 2024; 12
5753 (6) “Contribution” means: 13
5854 (A) Any payment directly allocated to an account for the 14
5955 benefit of a designated beneficiary or used to pay administrative fees 15
6056 associated with an account; and 16
6157 (B) That portion of any rollover amount treated as a 17
6258 contribution under 26 U.S.C. § 529, as in effect on January 1, 2020 2024; 18
6359 19
6460 SECTION 3. Arkansas Code § 6 -84-103(10), concerning the definitions 20
6561 used under the Arkansas Brighter Future Fund Plan Act, is amended to read as 21
6662 follows: 22
6763 (10) “Member of the family” shall have the same meaning as is 23
6864 contained in 26 U.S.C. § 529, as in effect on January 1, 2020 2024; 24
6965 25
7066 SECTION 4. Arkansas Code § 6 -84-103(12), concerning the definitions 26
7167 used under the Arkansas Brighter Future Fund Plan Act, is amended to read as 27
7268 follows: 28
7369 (12) “Person” means a person as defined in 26 U.S.C. § 529, as 29
7470 in effect on January 1, 2020 2024; 30
7571 31
7672 SECTION 5. Arkansas Code § 6 -84-103(14) and (15), concerning the 32
7773 definitions used under the Arkansas Brighter Future Fund Plan Act, are 33
7874 amended to read as follows: 34
7975 (14) “Qualified higher education expenses” means tuition and 35
80-other permitted expenses as set forth in 26 U.S.C. § 529, as in effect on 36 As Engrossed: H1/29/25 HB1085
76+other permitted expenses as set forth in 26 U.S.C. § 529, as in effect on 36 HB1085
8177
82- 3 01-29-2025 08:59:59 JLL079
83-
84-
78+ 3 12/17/2024 8:02:44 AM JLL079
8579 January 1, 2020 2024, for the enrollment or attendance of a designated 1
8680 beneficiary; 2
8781 (15) “Qualified tuition program” means a qualified tuition 3
8882 program as defined in 26 U.S.C. § 529, as in effect on January 1, 2020 2024; 4
8983 5
9084 SECTION 6. Arkansas Code § 6 -84-103(17), concerning the definitions 6
9185 used under the Arkansas Brighter Future Fund Plan Act, is amended to read as 7
9286 follows: 8
9387 (17) “Rollover” means a disbursement or transfer from an account 9
9488 that is transferred to or deposited within sixty (60) calendar days of the 10
9589 transfer: 11
9690 (A) Into an account of the same person for the benefit of 12
9791 the same designated beneficiary; 13
9892 (B) To the credit of another person as a designated 14
9993 beneficiary if the transferee account was created under this chapter or under 15
10094 another qualified tuition program maintained in accordance with 26 U.S.C. § 16
10195 529, as in effect on January 1, 2020 2024; or 17
10296 (C)(i) Before January 1, 2026, into an ABLE account under 18
10397 26 U.S.C. § 529A(e)(6), as in effect on January 1, 2020 2024, of the 19
10498 designated beneficiary or a member of the family of the designated 20
10599 beneficiary. 21
106100 (ii) Subdivision (17)(C)(i) of this section does not 22
107101 apply to so much of a distribution which, when added to all other 23
108102 contributions made to the ABLE account for the taxable year, exceeds the 24
109103 limitation under 26 U.S.C. § 529A(b)(2)(B)(i), as in effect on January 1, 25
110104 2020 2024. 26
111105 27
112106 SECTION 7. Arkansas Code § 6 -84-103, concerning the definitions used 28
113107 under the Arkansas Brighter Future Fund Plan Act, is amended to add an 29
114108 additional subdivision to read as follows: 30
115109 (18) "Rollover to Roth individual retirement account" means a 31
116110 direct trustee-to-trustee transfer from an account on or after January 1, 32
117111 2024, to a Roth individual retirement account for the benefit of the 33
118112 designated beneficiary that qualifies as a tax -free distribution under 26 34
119113 U.S.C. § 529(c)(3)(E), as in effect on January 1, 2024. 35
120- 36 As Engrossed: H1/29/25 HB1085
114+ 36 HB1085
121115
122- 4 01-29-2025 08:59:59 JLL079
123-
124-
116+ 4 12/17/2024 8:02:44 AM JLL079
125117 SECTION 8. Arkansas Code § 6 -84-105(b), concerning the administration 1
126118 of the Arkansas Brighter Future Fund Plan Act and the powers and duties of 2
127119 the Section 529 Plan Review Committee, is amended to read as follows: 3
128120 (b) The committee shall adopt such rules as it deems necessary and 4
129121 proper to administer this chapter and to ensure the compliance of the 5
130122 Arkansas Brighter Future Fund Plan with 26 U.S.C. § 529, as in effect on 6
131123 January 1, 2020 2024. 7
132124 8
133125 SECTION 9. Arkansas Code § 6 -84-105(c)(1), concerning the powers and 9
134126 duties of the Section 529 Plan Review Committee under the Arkansas Brighter 10
135127 Future Fund Plan Act, is amended to read as follows: 11
136128 (1) To establish, develop, implement, and maintain the plan in a 12
137129 manner consistent with the provisions of this chapter and 26 U.S.C. § 529, as 13
138130 in effect on January 1, 2020 2024, and to obtain the benefits provided by 26 14
139131 U.S.C. § 529 for the plan, account owners, and designated beneficiaries; 15
140132 16
141133 SECTION 10. Arkansas Code § 6 -84-106 is amended to read as follows: 17
142134 6-84-106. Investment direction. 18
143135 Except as permitted in 26 U.S.C. § 529, as in effect on January 1, 2020 19
144136 2024, no person shall have the right to direct the investment of any 20
145137 contributions to or earnings from the Arkansas Brighter Future Fund Plan. 21
146138 22
147139 SECTION 11. Arkansas Code § 6 -84-108(b), concerning the naming of a 23
148140 designated beneficiary and transfers of accounts under the Arkansas Brighter 24
149141 Future Fund Plan Act, is amended to read as follows: 25
150142 (b) At the direction of an account owner, all or a portion of an 26
151143 account may be transferred to another account of which the designated 27
152144 beneficiary is a member of the family of the designated beneficiary of the 28
153145 transferee account if the transferee account was created by this chapter or 29
154146 under another qualified tuition program maintained in accordance with 26 30
155147 U.S.C. § 529, as in effect on January 1, 2020 2024. 31
156148 32
157149 SECTION 12. Arkansas Code § 6 -84-109(b)(2), concerning account 33
158150 withdrawals under the Arkansas Brighter Future Fund Plan Act, is amended to 34
159151 read as follows: 35
160- (2) The report shall be made at the time required by the rules 36 As Engrossed: H1/29/25 HB1085
152+ (2) The report shall be made at the time required by the rules 36 HB1085
161153
162- 5 01-29-2025 08:59:59 JLL079
163-
164-
154+ 5 12/17/2024 8:02:44 AM JLL079
165155 of the Internal Revenue Service as in effect on January 1, 2020 2024 and 1
166156 contain such information as is required by law. 2
167157 3
168158 SECTION 13. Arkansas Code § 6 -84-111(a)(1), concerning funds exempt 4
169159 from tax under the Arkansas Brighter Future Fund Plan Act, is amended to read 5
170160 as follows: 6
171161 (a)(1) Except as otherwise indicated in this chapter, interest, 7
172162 dividends, and capital gains from funds invested in the Arkansas Brighter 8
173163 Future Fund Plan or a tax -deferred tuition savings program established by 9
174164 another state under 26 U.S.C. § 529, as in effect on January 1, 2020 2024, 10
175165 shall be exempt from Arkansas income taxes. 11
176166 12
177167 SECTION 14. Arkansas Code § 6 -84-111(b)(3), concerning funds exempt 13
178168 from tax under the Arkansas Brighter Future Fund Plan Act, is amended to read 14
179169 as follows: 15
180170 (3) Contributions to this plan that have been deducted from the 16
181171 taxpayer employee's adjusted gross income for prior tax years shall be 17
182172 subject to recapture from the taxpayer employee if the taxpayer employee: 18
183173 (A) Makes a subsequent nonqualified withdrawal from the 19
184174 account; or 20
185175 (B) Rolls the account over to a tax -deferred tuition 21
186176 savings program established by another state or institution under 26 U.S.C. § 22
187177 529, as in effect on January 1, 2020 2024. 23
188178 24
189179 SECTION 15. Arkansas Code § 6 -84-111(c)-(g), concerning funds exempt 25
190180 from tax under the Arkansas Brighter Future Fund Plan Act, are amended to 26
191181 read as follows: 27
192182 (c)(1)(A) For tax years beginning on or after January 1, 2017, 28
193183 contributions to a tuition savings account established under this plan or a 29
194184 tax-deferred tuition savings program established by another state under 26 30
195185 U.S.C. § 529, as it existed on January 1, 2017 2024, may be deducted from the 31
196186 taxpayer's adjusted gross income for the purpose of calculating Arkansas 32
197187 income tax under § 26 -51-403(b). 33
198188 (B) A taxpayer may not deduct from the taxpayer's adjusted 34
199189 gross income a contribution to a tax -deferred tuition savings program 35
200-established by another state if the taxpayer deducted the contribution in 36 As Engrossed: H1/29/25 HB1085
190+established by another state if the taxpayer deducted the contribution in 36 HB1085
201191
202- 6 01-29-2025 08:59:59 JLL079
203-
204-
192+ 6 12/17/2024 8:02:44 AM JLL079
205193 another state or on another state's income taxes. 1
206194 (2)(A) The deductible contributions for a tuition savings 2
207195 account established under this chapter shall not exceed five thousand dollars 3
208196 ($5,000) per taxpayer in any tax year. 4
209197 (B) If the aggregate amount of contributions by a taxpayer 5
210198 during a tax year exceeds the limitation under subdivision (c)(2)(A) of this 6
211199 section, the unused aggregate amount may be carried forward to the next 7
212200 succeeding four (4) tax years. 8
213201 (C) The deductible contributions for a tax -deferred 9
214202 tuition savings program established by another state under 26 U.S.C. § 529, 10
215203 as it existed on January 1, 2017 2024, shall not exceed three thousand 11
216204 dollars ($3,000) per taxpayer in any tax year. 12
217205 (D) The deductible contributions for a tax -deferred 13
218206 tuition savings program established by another state under 26 U.S.C. § 529, 14
219207 as it existed on January 1, 2017 2024, that are rolled over into a tuition 15
220208 savings account established under this chapter shall not exceed seven 16
221209 thousand five hundred dollars ($7,500) per taxpayer in the tax year in which 17
222210 they were rolled over. 18
223211 (d)(1)(A) For tax years beginning on or after January 1, 2018, 19
224212 contributions to a tuition savings account established under the plan or a 20
225213 tax-deferred tuition savings program established by another state under 26 21
226214 U.S.C. § 529, as it existed on January 1, 2018 2024, may be deducted from 22
227215 the taxpayer's adjusted gross income for the purpose of calculating Arkansas 23
228216 income tax under § 26 -51-403(b). 24
229217 (B) A taxpayer may not deduct from the taxpayer's adjusted 25
230218 gross income a contribution to a tax -deferred tuition savings program 26
231219 established by another state if the taxpayer deducted the contribution in 27
232220 another state or on another state's income taxes. 28
233221 (2)(A) The deductible contributions for a tuition savings 29
234222 account established under this chapter shall not exceed five thousand dollars 30
235223 ($5,000) per taxpayer in any tax year. 31
236224 (B) If the aggregate amount of contributions by a taxpayer 32
237225 during a tax year exceeds the limitation under subdivision (d)(2)(A) of this 33
238226 section, the unused aggregate amount may be carried forward to the next 34
239227 succeeding four (4) tax years. 35
240- (C) The deductible contributions for a tax -deferred 36 As Engrossed: H1/29/25 HB1085
228+ (C) The deductible contributions for a tax -deferred 36 HB1085
241229
242- 7 01-29-2025 08:59:59 JLL079
243-
244-
230+ 7 12/17/2024 8:02:44 AM JLL079
245231 tuition savings program established by another state under 26 U.S.C. § 529, 1
246232 as it existed on January 1, 2018 2024, shall not exceed three thousand 2
247233 dollars ($3,000) per taxpayer in any tax year. 3
248234 (D) The deductible contributions for a tax -deferred 4
249235 tuition savings program established by another state under 26 U.S.C. § 529, 5
250236 as it existed on January 1, 2018 2024, that are rolled over into a tuition 6
251237 savings account established under this chapter shall not exceed seven 7
252238 thousand five hundred dollars ($7,500) per taxpayer in the tax year in which 8
253239 they were rolled. 9
254240 (e)(1)(A) For tax years beginning on and after January 1, 2021, 10
255241 contributions to a tuition savings account established under the plan or a 11
256242 tax-deferred tuition savings program established by another state under 26 12
257243 U.S.C. § 529, as in effect on January 1, 2020 2024, may be deducted from the 13
258244 taxpayer's adjusted gross income for the purpose of calculating Arkansas 14
259245 income tax under § 26 -51-403(b). 15
260246 (B) A taxpayer may not deduct from the taxpayer's adjusted 16
261247 gross income a contribution to a tax -deferred tuition savings program 17
262248 established by another state if the taxpayer deducted the contribution in 18
263249 another state or on another state's income taxes. 19
264250 (2)(A) The deductible contributions for a tuition savings 20
265251 account established under this chapter shall not exceed five thousand dollars 21
266252 ($5,000) per taxpayer in any tax year. 22
267253 (B) If the aggregate amount of contributions by a taxpayer 23
268254 during a tax year exceeds the limitation under subdivision (e)(2)(A) of this 24
269255 section, the unused aggregate amount may be carried forward to the next 25
270256 succeeding four (4) tax years. 26
271257 (C) The deductible contributions for a tax -deferred 27
272258 tuition savings program established by another state under 26 U.S.C. § 529, 28
273259 as in effect on January 1, 2020 2024, shall not exceed three thousand dollars 29
274260 ($3,000) per taxpayer in any tax year. 30
275261 (D) The deductible contributions for a tax -deferred 31
276262 tuition savings program established by another state under 26 U.S.C. § 529, 32
277263 as in effect on January 1, 2020 2024, that are rolled over into a tuition 33
278264 savings account established under this chapter shall not exceed seven 34
279265 thousand five hundred dollars ($7,500) per taxpayer in the tax year in which 35
280-they were rolled over. 36 As Engrossed: H1/29/25 HB1085
266+they were rolled over. 36 HB1085
281267
282- 8 01-29-2025 08:59:59 JLL079
283-
284-
268+ 8 12/17/2024 8:02:44 AM JLL079
285269 (f)(1) Qualified withdrawals , rollovers, and rollovers to a Roth 1
286270 individual retirement account from a tuition savings account established 2
287271 under this plan or a tax -deferred tuition savings program established by 3
288272 another state under 26 U.S.C. § 529, as in effect on January 1, 2020 2024, 4
289273 will be exempt from Arkansas income tax with respect to the designated 5
290274 beneficiary's income. 6
291275 (2)(A) Nonqualified withdrawals from a tuition savings account 7
292276 established under this plan or a tax -deferred tuition savings program 8
293277 established by another state under 26 U.S.C. § 529, as in effect on January 9
294278 1, 2020 2024, will be subject to Arkansas income tax. 10
295279 (B) The nonqualified withdrawal will be taxable to the 11
296280 party, account owner, or designated beneficiary who actually makes the 12
297281 withdrawal. 13
298282 (g) Any earnings on the contribution that are included in the refund 14
299283 will be subject to Arkansas income tax if an account owner receives a refund 15
300284 of contributions to a tuition savings account established under this plan or 16
301285 a tax-deferred tuition savings program established by another state under 26 17
302286 U.S.C. § 529, as in effect on January 1, 2020 2024, because of either: 18
303287 (1) The death or disability of the designated beneficiary; or 19
304288 (2) A scholarship, allowance, or payment described in 26 U.S.C. 20
305289 § 135(d)(1)(B) or (d)(1)(C), as in effect on January 1, 2018, received by the 21
306290 designated beneficiary. 22
307291 23
308292 SECTION 16. Arkansas Code § 6 -84-113 is amended to read as follows: 24
309293 6-84-113. Liberal construction. 25
310294 This chapter shall be liberally construed to comply with the 26
311295 requirements of 26 U.S.C. § 529, as in effect on January 1, 2020 2024. 27
312296 28
313297 SECTION 17. Arkansas Code § 26 -51-414(b), concerning the tax treatment 29
314298 of deferred compensation plans, is amended to read as follows: 30
315299 (b) Title 26 U.S.C. § 408A as in effect on January 1, 2010, relating 31
316300 to Roth individual retirement accounts, is adopted for the purpose of 32
317301 computing Arkansas income tax liability, except with regard to : adjusted 33
318302 (1) Adjusted gross income under 26 U.S.C. § 408A(c)(3), which 34
319303 shall be determined in the same manner as under § 26 -51-403(b); and 35
320- (2) Rollover contributions from a tuition savings account 36 As Engrossed: H1/29/25 HB1085
304+ (2) Rollover contributions from a tuition savings account 36 HB1085
321305
322- 9 01-29-2025 08:59:59 JLL079
323-
324-
306+ 9 12/17/2024 8:02:44 AM JLL079
325307 established under the Arkansas Brighter Future Fund Plan Act, § 6 -84-101 et 1
326308 seq., or a tax-deferred tuition savings program established by another state 2
327309 under 26 U.S.C. § 529, as in effect on January 1, 2024, which shall be 3
328310 treated as provided in 26 U.S.C. § 408A(c)(3)(E), § 408A(c)(5), and § 4
329311 408A(e)(1), as they existed on December 29, 2022 . 5
330312 6
331313 SECTION 18. EFFECTIVE DATE. Sections 1 -17 of this act are effective 7
332314 for tax years beginning on or after January 1, 2024. 8
333315 9
334-/s/K. Brown 10
316+ 10
335317 11
336318 12
337-APPROVED: 4/17/25 13
319+ 13
338320 14
339321 15
340322 16
341323 17
342324 18
343325 19
344326 20
345327 21
346328 22
347329 23
348330 24
349331 25
350332 26
351333 27
352334 28
353335 29
354336 30
355337 31
356338 32
357339 33
358340 34
359341 35
360342 36