Compare College Investment Programs
 

College Investment Program

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Roth IRA
Contribution Limits Up to $4,000 per year.
Account Control Account owner.
Tax Benefits Tax-deferred growth potential.
Withdrawal of principal is tax- and penalty-free.
Withdrawal of earnings is tax- and penalty-free after five years from the first contribution and age 59˝.
Withdrawal of earnings for qualified higher education expenses is always penalty-free, but is not always tax-free.
Income Limitations MAGI limits apply. Eligibility begins to phase out at $99,000 MAGI for single taxpayers ($156,000 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 N/A.
Conditions for Use The participant can make penalty-free withdrawals if the money is used to pay for the higher education expenses of the participant or the participant’s spouse, child or grandchild.
Gift and Estate Planning Benefits N/A for gift tax. Ability to name beneficiary on account in event of death.
Advantages Account owner retains control of assets.
Can use money for any person.
Disadvantages Not available to high-income families.
Low contribution limit.
Dollar-for-dollar reduction in other tax-advantaged retirement savings.
Earnings on non-qualified withdrawals may be subject to income taxes at the account owner’s rate plus a 10 percent federal tax penalty.

1 Modified Adjusted Gross Income (MAGI) limits listed reflect limits for the 2007 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.