1. (a) Tuition savings program — Generally.

   1. (1)

      1. (A) The Arkansas Tax-Deferred Tuition Savings Program Act of 1997, Arkansas Code § 6-83-101 et seq. [repealed], became effective on August 1, 1997.
      2. (B) The Arkansas Tax-Deferred Tuition Savings Program Act of 1997 is based closely upon the federal law regarding qualified state tuition programs found at I.R.C. § 529.
      3. (C) For purposes of administering the Arkansas Tax-Deferred Tuition Savings Program Act of 1997, the provisions of I.R.C. § 529 regarding qualified state tuition programs should be considered to have been adopted as Arkansas law.

   2. (2)

      1. (A) Arkansas residents or nonresidents may make cash contributions to a special tax-deferred account for the purpose of accumulating funds to pay the expenses of attending a post-secondary institution of higher education located either inside or outside of Arkansas.
      2. (B) The contributions will be held, invested, and accounted for by the Arkansas Teacher Retirement System.
   3. (3) "Expenses" shall be limited to tuition, fees, books, supplies, and equipment required for enrollment or attendance at the post-secondary institution.

   4. (4)

      1. (A) "Post-secondary institutions of higher education" shall include two-year and four-year:

2. (i) Colleges;

   1. (ii) Universities;

      1. (iii) Technical schools; and

         1. (iv) Institutes.

      2. (B) Institutions that meet all of the following criteria would also qualify:

         1. (i) The institution provides not less than a six-month program of training to prepare students for gainful employment in a recognized occupation;
         2. (ii) The institution is:
3. (a) (a) Licensed by the State Board of Private Career Education; or

4. (b) (b) Accredited by a nationally recognized accrediting agency;

   1. (iii) The institution has been in existence for at least two (2) years; and

      1. (iv) The institution admits as regular students persons who are beyond the age of compulsory school attendance within the State of Arkansas.
      2. (C) I.R.C. § 135(c)(3), 20 U.S.C. § 1201a(10) [repealed], 20 U.S.C. § 1088.

   2. (5)

      1. (A) The account must have a designated beneficiary, who must be either the contributor to the account or a member of the contributor's family.

      2. (B) Qualifying family members are limited to the following:

         1. (i) An ancestor of the contributor;
         2. (ii) A contributor's spouse;
         3. (iii) A lineal descendant of:
5. (a) (a) The contributor;

6. (b) (b) The contributor's spouse; or

   1. (c) (c) A parent of the contributor; or

      1. (iv) The spouse of any lineal descendant falling within the scope of subdivision (a)(5)(B)(iii) of this section, above.
      2. (C) I.R.C. § 2032A(e)(2).
7. (b) Acts 1997, No. 1309 [repealed] — Tuition savings program — Tax consequences. Contributor's Gross Income Beneficiary's Gross Income Contributions **Nondeductible Excluded To Program Earnings on Excluded Excluded Contributions *Distributions Excluded Excluded From Program *Any distributions made to the contributor or beneficiary that are not used as qualifying expenses at a qualifying post-secondary institution of higher education must be included in the taxpayer's taxable income. **Contributions to a tax-deferred tuition savings program account are not deductible "above the line" as an adjustment to the contributor's gross income. Arkansas' tuition savings program is based upon IRC Sec. 529 which does not allow contributions to such programs to be taken as deductions.

Codification Notes: The Arkansas Tax-Deferred Tuition Savings Program Act of 1997 was repealed by Acts 1999, No. 996, § 15. I.R.C. § 529 is codified at 26 U.S.C. § 529. I.R.C. § 135(c)(3) is codified at 26 U.S.C. § 135(c)(3). 20 U.S.C. § 1201a was repealed by Pub. L. No. 105-220.