Compare College Investment Programs
 

College Investment Program

view pdf

Alabama Higher Education 529 Fund
Contribution Limits Maximum contribution limit: Contribute until account value is $300,000.*
Low initial contribution requirements:
As low as $250 to open an account.
As low as $25 per month per portfolio.
Account Control Account owner (not beneficiary).
Tax Benefits Tax-deferred growth potential.
Earnings exempt from state and federal income tax for qualified withdrawals. Non-qualified withdrawals may be subject to federal and state income taxes, as well as a 10 percent early-withdrawal penalty.1
Income Limitations None.
Investment Options Choose from three strategies: Years to Enrollment Portfolios: Portfolios automatically rebalance as beneficiary nears enrollment. Fixed Portfolios: 100 percent Equity; 100 percent Bonds; 100 percent Short Term Income (50% cash, 50% bond). Individual Fund Portfolios: Consist of 11 actively managed portfolios and 2 index portfolios, each invested in a single underlying mutual fund.
Ability to Change Beneficiary May transfer to another member of the beneficiary’s family.2
Conditions for Use Can be used toward tuition, room and board, books and fees at any accredited public or private college, junior college, trade or graduate school nationwide.
Gift and Estate Planning Benefits Contributions are treated as a completed gift from the contributor to the beneficiary.3
1. Contribute up to $12,000 annually ($24,000 for married couples) on behalf of a beneficiary without having to file a gift-tax return or pay gift taxes. Plan contributions are treated as a gift to the beneficiary and may have gift and generation-skipping transfer tax implications—particularly when other gifts are made to the beneficiary in the same year. Keep in mind, gift-giving limits are subject to certain exceptions. Talk to your tax advisor.
2. Accelerate gifting by contributing five years of gifts in one year ($60,000 for single individuals, $120,000 for married couples) on behalf of a beneficiary. Assumes that no additional gifts to the beneficiary are made within the five years. Also, if the account owner dies before the five-year period has elapsed, the remaining portion of the contribution will be included in the account owner’s estate for estate tax purposes and may be subject to generation-skipping taxes.
Advantages Professional investment management from Van Kampen Investments.
No income restrictions.
Account owner retains control of assets.
Anyone can contribute to the account.
May transfer account to another member of the beneficiary’s family.2
Low minimum initial investment.
Tax-free withdrawals for qualified expenses.
Tax-deferred growth potential.
Disadvantages Earnings on non-qualified withdrawals subject to federal income taxes at the account owner’s tax rate plus a 10 percent federal penalty. Account owner may only change investment options once per year or upon change in designated beneficiary.

* Per beneficiary, over the life of the fund. The maximum account balance limit per beneficiary is reviewed by the Board of Trustees of the Program Trust Fund and may change. The limit applies to the aggregate value of accounts in the Alabama Higher Education 529 Fund and the Alabama Prepaid Affordable College Tuition (PACT) Program.

1 Van Kampen and the State of Alabama Treasurer’s office do not provide tax advice. Please consult your tax advisor.

2 The new beneficiary must be a member of the family of the previous beneficiary, as defined in the Program Disclosure Statement.

3 Assumes no other gifts are made to the beneficiary in the same tax year.



 
           
   
 
 
   
 


An investor should consider the investment objectives, risks, charges, expenses and tax consequences associated with the Program before investing. All of this information is contained in the Program Disclosure Statement. Please read it carefully before investing. For a copy, call 866.529.ACCT (2228) or visit www.treasury.alabama.gov.

If you or your beneficiary are not Alabama residents, consider whether your home state or the home state of your designated beneficiary offers a Qualified Tuition Program that provides state-tax or other benefits only available through your home state’s Qualified Tuition Program.

The Program is offered by the State of Alabama and is designed to be a Qualified Tuition Program under Section 529 of the Internal Revenue Code. The FDIC, the State of Alabama, the Treasurer of the State of Alabama, the Board of Trustees of the Program Trust Fund or any other federal or state governmental agencies do not insure or guarantee accounts and investments under the Program. Van Kampen Funds, Inc. is the underwriter for the Program. The Program is also offered through independent distributors that have selling agreements with Van Kampen Funds Inc., which serves as an independent distributor for the Program.

Van Kampen and the State of Alabama’s Treasurer’s office do not render tax or legal advice. This material was not intended or written for—and cannot be used by—any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Please consult your tax advisor regarding your individual situation.