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Important Federal and State Tax Updates

Tax Reform

On December 22nd, 2017, new federal tax reform legislation was signed into law. The law amends Section 529 of the Code to permit withdrawals from 529 Plan accounts up to $10,000 per year per student (in the aggregate across all Qualified Tuition Programs for that student) for tuition expenses in connection with enrollment and attendance at an elementary or secondary public, private or religious school (K-12 Tuition). The law also permits rollovers from a 529 Plan account to a Qualified ABLE Program account (ABLE Rollover Distribution) up to the annual contribution limit for Qualified ABLE Program accounts.

Secure Act

On December 20th, 2019, the SECURE Act was signed into law. The SECURE Act amends Section 529 of the Code to permit withdrawals to pay for expenses for apprenticeship programs registered and certified with the Secretary of Labor under the National Apprenticeship Act (Apprenticeship Program Expenses) and to pay principal and interest on certain qualified education loans (Education Loan Repayments) for a beneficiary or any of the beneficiary’s siblings. The loan repayment provisions apply to repayments up to a lifetime maximum of $10,000 per individual. The effective date of the SECURE Act is January 1st, 2019.

Montana Taxation

of Distributions for K-12 Tuition, Apprenticeship Program Expenses, and Education Loan Repayments

Effective April 30, 2021, Montana law was updated to treat distributions for K-12 Tuition, Apprenticeship Program Expenses, and Education Loan Repayments as qualified withdrawals for Montana state income tax purposes. This means that, beginning April 30, 2021, any distributions from an account to pay these types of expenses will not be subject to the Montana state recapture tax on contributions previously deducted.

The Montana Department of Revenue has not provided guidance on the State tax law treatment of ABLE Rollover Distributions.

Montana taxpayers should consult their tax advisors before making a contribution or withdrawal for K-12 Tuition, Apprenticeship Program Expenses, Education Loan Repayments, or initiating an ABLE Rollover Distribution. Achieve Montana account owners in other states should seek guidance from the state in which they pay taxes.

Please read the Program Description for additional information. You can also reach our Client Service Representatives by email at clientservice@achievemontana529.com or by phone at 1-877-486-9271, Monday through Friday from 7 a.m. to 6 p.m., Mountain Time.

For more information about Achieve Montana, call 877.486.9271 or download an Enrollment Kit. The Enrollment Kit includes a Program Description that discusses investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.
If you are not a Montana taxpayer, before investing in Achieve Montana, you should consider the benefits of your home state’s qualified tuition program. It may provide taxpayers with state tax and other benefits such as financial aid, scholarship funds and protection from creditors, that are only available through your home state’s qualified tuition program. You should also consult your financial, tax, or other advisor to learn how state-based benefits (or limitations) would apply to your specific circumstances. Tax and other penalties may apply to non-qualified withdrawals.
Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision. In addition, you should periodically assess, and if appropriate, adjust your Section 529 Plan investment choices with your time horizon, risk tolerance and investment objectives in mind.
Achieve Montana is sponsored by the State of Montana and administered by the Montana Board of Regents of Higher Education, as sole trustee of the Montana Family Education Savings Trust (Trust). Ascensus College Savings Recordkeeping Services, LLC serves as program manager and provides recordkeeping and administrative support services for Achieve Montana. Blackrock Fund Advisors, Dimensional Fund Advisors LP, Charles Schwab Investment Management, Inc., New York Life Insurance Company and the Vanguard Group, Inc. each provide investment management services for the underlying investments comprising Achieve Montana’s portfolios. Although some of the portfolios invest in mutual funds, they are not mutual funds. When you invest in Achieve Montana, you are purchasing portfolio units issued by the Trust. Except to the extent of the New York Life Insurance Company guarantee that is available for the Capital Preservation Portfolio and certain Year of Enrollment Portfolios, investment returns are not guaranteed, and you could lose money by investing in Achieve Montana.
Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.
Upromise is an optional service offered by Upromise, Inc., is separate from Achieve Montana, and is not affiliated with the State of Montana. Terms and conditions apply to the Upromise service. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Transfers from Upromise to an Achieve Montana account are subject to a $25 minimum. Go to upromise.com to learn more about Upromise.
Upromise and the Upromise logo are registered service marks of Upromise, Inc. Ugift is a registered service mark of Ascensus Broker Dealer Services, Inc., an affiliate of Ascensus College Savings Recordkeeping Services, LLC.
Vanguard is a registered mark of The Vanguard Group, Inc. All other trademarks, service marks or registered trademarks are the property of their respective owners. Used with permission.