Compare College Investment Programs
 

College Investment Program

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Alabama’s Prepaid Affordable College Tuition Program (PACT)
Contribution Limits Contribution, or contract prices,3 vary by student’s age—from infancy to the 9th grade.
Extended monthly payment plans.
Five-year monthly payment plans.
Lump-sum payments.
Contracts can be purchased for one year of tuition or four years of tuition.
Account Control Contract 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 The Trust Fund is professionally managed, with approximately 70 percent of the portfolio invested in equities and 30 percent invested in domestic debt securities.
Ability to Change Beneficiary May transfer to another member of the beneficiary’s family.2
Conditions for Use Can be used toward tuition and qualified fee payments at any Alabama accredited public college or university based on the number of hours purchased. Can be used at out-of-state or private schools, with tuition payments equal to the average tuition and qualified fees paid at Alabama public four-year institutions.
Gift and Estate Planning Benefits Contributions are treated as a completed gift from the contributor to the beneficiary.
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.
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.
Advantages Qualified distributions state and federal-tax free.
No income restrictions.
Contract purchaser retains control of assets.
May transfer contract to another member of the beneficiary’s family.2
Anyone can contribute.
Disadvantages Does not cover books, room and board or advanced degrees. Earnings on non-qualified withdrawals subject to federal income taxes at the contract owner’s tax rate plus a 10 percent federal penalty.

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 Prices are subject to change.



 

  
           
   
 
 
   
 


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.