Compare College Investment Programs
 

College Investment Program

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Coverdell Education Savings Accounts (formerly Education IRA)
Contribution Limits $2,000 per beneficiary per year. Cannot contribute for beneficiaries over age 18, unless the beneficiary is a special-needs beneficiary.
Account Control “Responsible individual” (generally the parent or guardian of the beneficiary).
Control may be given to beneficiary at age of majority.
Tax Benefits Tax-deferred growth potential.
Earnings exempt from federal income tax for qualified withdrawals.
Income Limitations Modified Adjusted Gross Income (MAGI) limits apply. Eligibility begins to phase out at $95,000 MAGI for single taxpayers, ($190,000 MAGI for married taxpayers filing jointly).1
Investment Options Variety of options.
Account owner is responsible for making changes to asset-allocation mix.
Ability to Change Beneficiary May transfer to another member of the beneficiary’s family who has not attained age 30.
Conditions for Use Can be used for tuition, room and board, books, fees, and other expenses at any accredited K–12 school nationwide, or tuition, room and board, books and fees at accredited higher education schools.

Money must be used by the time beneficiary reaches age 30, unless the beneficiary is a special-needs beneficiary.
Gift and Estate Planning Benefits Contributions are treated as a completed gift from the contributor to the beneficiary.
Advantages May transfer to another member of the beneficiary’s family.
Anyone can contribute to the account.
Can be used for primary and secondary school expenses.
Disadvantages Not available to high-income families. Student can be granted control at age of majority.
Beneficiary generally must use funds by age 30.
Earnings on non-qualified withdrawals are subject to federal income taxes at the distributee’s rate plus a 10 percent federal tax penalty. No five-year accelerated gift tax exclusion.




 

  
           
   
 
 
   
 


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.