Montana Residents:

Updates on Tax Reform,  SECURE Act, Montana Taxation of Distributions for K-12 Tuition, Apprenticeship Program Expenses, and Education Loan Repayments


K-12 Tuition, Apprenticeship Programs and Education Loan Repayments.  Effective April 30, 2021, Montana law was updated to add K‐12 Tuition Distributions, Apprenticeship Program Expenses and Education Loan Repayments as qualified expenses for state income tax purposes.  The law was also updated to shorten the amount of time (from three years to one year) an account must be open before making distributions free from the Montana recapture tax. 

Roth IRA Rollovers.  Effective January 1, 2024, Section 529 of the Internal Revenue Code was revised to allow rollovers from a Montana Family Education Savings Plan – Bank Plan Account to a Roth IRA for the Account’s Beneficiary without federal tax consequences, with certain important conditions. 

Those conditions include:

  • a lifetime limit of $35,000
  • the Bank Plan Account must be maintained for at least the 15-year period ending on the date of the rollover
  • the rollover cannot exceed the total amount contributed to the Account, and earnings on those contributions, before the 5-year period ending on the Rollover Date
  • the rollover cannot exceed the annual contribution limits of a Roth IRA. 

Additional restrictions may apply under the federal Roth IRA rules and guidance.

The Montana Department of Revenue has not provided information on whether a Roth IRA Rollover may be subject to Montana income tax and the recapture tax.  Funds used to complete a Roth IRA Rollover may, therefore, subject you to the Montana state recapture tax on contributions previously deducted and may require your Beneficiary to include the earnings in their gross income.



NexBank and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.