Overview of Arkansas 529 Plan Match:
The Aspiring Scholars Program is truly one of the more amazing benefits offered by any state to help pay for college costs. The program, which offers “matching funds” to residents who contribute to an Arkansas Section 529 plan, can put as much as $2,500 (over five years) into residents’ pockets.
How the Aspiring Scholars Program Works:
The Aspiring Scholars Program matches contributions made into an existing Arkansas GIFT Section 529 account, for any beneficiary (child) who is an Arkansas resident. The account itself can be set up for any child by a parent, grandparent, extended family member, or even a family friend. However, each child is only eligible for one matching account.To receive matching funds from the state, you need to complete an Aspiring Scholar application by April 30th of the current year. The state of Arkansas will then notify you of your eligibility (based on income) by June 30th.
If eligible, the state will then set up an additional account with the child’s name on it. The funds that the state puts into this account are not mixed with your main Arkansas Section 529 account.
Matching funds will be deposited by January 31st of the following year, assuming that you make sufficient contributions during the remainder of 2008.
Age Eligibility for the Arkansas 529 Plan Match:
Any child receiving funds may not be older than age 18 in their first year participating in the Aspiring Scholars Program. After their first year however, they may participate for a maximum of four additional years, up to age 23.
Income Eligibility for the Arkansas 529 Plan Match:
Eligibility to receive matching funds is based on the household adjusted gross income of the donor in the year prior to the year a gift is made. For example, if you were going to make a 2008 contribution, your 2007 adjusted gross income from your tax return would determine your eligibility.To receive matching contributions for money deposited in an Arkansas Section 529 GIFT account, your household’s adjusted gross income for 2007 must be less than $60,000.
Specifically, if your household income is:
- $0-30,000, you will receive two dollars for every dollar you contribute ($500 max).
- $30,001-60,000, you will receive one dollar for every dollar you contribute ($500 max).
In other words, those in the lower income range would receive $500 in matching funds for contributing just $250! Those in the higher bracket would still receive a very generous $500 for their first $500 of contributions.
Retroactive Eligibility:
Parents or other account owners who made contributions during 2007 may be eligible to receive a retroactive contribution as well.
Forfeiture of Unused Funds:
The Aspiring Scholars Program was designed to help fund the higher education costs of Arkansas residents. Failure to use your own Arkansas Section 529 funds for this purpose may result in forfeiture of funds set aside by the state for a child.Specific situations that would result in a forfeiture of matching funds would include:
- Moving all your funds to another state’s Section 529 plan.
- Changing the beneficiary on your GIFT plan to a non-family member.
- The child dies or becomes disabled, and you have no eligible family members to roll your GIFT account over to.
- Non-qualified withdrawals from your GIFT plan that reduce your contributed balance to less than $25.
- Non-qualified withdrawals from your GIFT plan that lower your contributed balance below what the state has already matched.
Applying for the Arkansas 529 Plan Matching Contribution:
To receive funds under the Aspiring Scholars Program, you need to have an existing Arkansas Section 529 GIFT account, and also complete a Matching Grant Application by April 30th. You must include a copy of your Arkansas Income Tax Return from the prior year with your Aspiring Scholars application.You can download applications for the Arkansas Section 529 GIFT plan as well as the Aspiring Scholars from the state Section 529 website. You can also request information by calling 1-800-587-7301.
