Alabama 529 | Compare Savings Plans

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With so many college investing options, finding a plan that is right for you can seem overwhelming. That’s why it is important to identify your goals, weigh your options, and review them with your financial professional.

Select links below to access individual plan snapshots.

	Alabama Higher Education 529 Fund	Alabama’s Prepaid Affordable College Tuition Program (PACT)	Coverdell Education Savings Accounts (formerly Education IRA)	Uniform Gift to Minors Act (UGMA) Uniform Transfer to Minors Act (UTMA)	Roth IRA	Savings Bonds
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.	Contribution, or contract prices,⁵ 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.	$2,000 per beneficiary per year. Cannot contribute for beneficiaries over age 18, unless the beneficiary is a special-needs beneficiary.	None.	Up to $4,000 per year.	Annual purchase limit of $30,000 ($60,000 for married co-owners) for Series EE bonds and $30,000 for Series I bonds. No lifetime limits. Owner must be at least age 24 at date of issuance.
Account Control	Account owner (not beneficiary).	Contract owner (not beneficiary).	“Responsible individual” (generally the parent or guardian of the beneficiary). Control may be given to beneficiary at age of majority.	Custodian. Beneficiary assumes control of the account once beneficiary reaches age of majority. (In Alabama, age of majority is 18 for married persons, 19 for single persons. Age of majority varies by state.)	Account owner.	Bond owner. Exclusion does not apply if bond is issued in child’s name.
	Alabama Higher Education 529 Fund	Alabama’s Prepaid Affordable College Tuition Program (PACT)	Coverdell Education Savings Accounts (formerly Education IRA)	Uniform Gift to Minors Act (UGMA) Uniform Transfer to Minors Act (UTMA)	Roth IRA	Savings Bonds
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	Tax-deferred growth potential. Earnings exempt from state and federal income tax for qualified withdrawals for higher education expenses. Non-qualified withdrawals may be subject to federal and state income taxes, as well as a 10 percent early-withdrawal penalty.¹	Tax-deferred growth potential. Earnings exempt from federal income tax for qualified withdrawals.	Income and earnings in excess of standard deduction are taxed annually at child’s tax rate (special rules apply for children under the age of 14).	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 59½. Withdrawal of earnings for qualified higher education expenses is always penalty-free, but is not always tax-free.	Tax-deferred growth potential. Tax-free interest if used for qualified higher education expenses of purchaser, spouse, or dependent.
Income Limitations	None.	None.	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).²	None.	MAGI limits apply. Eligibility begins to phase out at $99,000 MAGI for single taxpayers ($156,000 MAGI for married taxpayers filing jointly).²	MAGI limits apply. Eligibility phases out at $65,600 MAGI for single taxpayers ($98,400 MAGI for married taxpayers filing jointly).²
	Alabama Higher Education 529 Fund	Alabama’s Prepaid Affordable College Tuition Program (PACT)	Coverdell Education Savings Accounts (formerly Education IRA)	Uniform Gift to Minors Act (UGMA) Uniform Transfer to Minors Act (UTMA)	Roth IRA	Savings Bonds
Investment Options	Choose from three strategies: Years to Enrollment Portfolios: Portfolios automatically rebalance as beneficiary nears enrollment. Fixed Portfolios: 100% Equity; 100% Bonds; 100% 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.	The Trust Fund is professionally managed, with approximately 70 percent of the portfolio invested in equities and 30 percent invested in domestic debt securities.	Variety of options. Account owner is responsible for making changes to asset-allocation mix.	Variety of options. Custodian is responsible for making changes to asset-allocation mix.	Variety of options. Account owner is responsible for making changes to asset-allocation mix.	N/A. Qualified U.S. Savings Bonds only. (Series EE or I bonds issued after 1989.)
Ability to Change Beneficiary	May transfer to another member of the beneficiary’s family.³	May transfer to another member of the beneficiary’s family.³	May transfer to another member of the beneficiary’s family who has not attained age 30.	No.	N/A.	Yes, but tax advantage applies only if funds are used for tuition and fees for purchaser, spouse, or dependent at accredited higher education schools.
	Alabama Higher Education 529 Fund	Alabama’s Prepaid Affordable College Tuition Program (PACT)	Coverdell Education Savings Accounts (formerly Education IRA)	Uniform Gift to Minors Act (UGMA) Uniform Transfer to Minors Act (UTMA)	Roth IRA	Savings Bonds
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.	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.	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.	Must be used for the child’s benefit.	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.	Can be used for any purpose, but tax advantage applies only if used for tuition and fees for purchaser, spouse, or dependent at accredited higher education schools.
Gift and Estate Planning Benefits	Contributions are treated as a completed gift from the contributor to the beneficiary.⁴ 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.	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.	Contributions are treated as a completed gift from the contributor to the beneficiary.	Contributions are treated as a completed gift from the contributor to the beneficiary.	N/A for gift tax. Ability to name beneficiary on account in event of death.	N/A for gift tax. Ability to name beneficiary of bond in event of death.
	Alabama Higher Education 529 Fund	Alabama’s Prepaid Affordable College Tuition Program (PACT)	Coverdell Education Savings Accounts (formerly Education IRA)	Uniform Gift to Minors Act (UGMA) Uniform Transfer to Minors Act (UTMA)	Roth IRA	Savings Bonds
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.³ Low minimum initial investment. Tax-free withdrawals for qualified expenses. Tax-deferred growth potential.	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.³ Anyone can contribute.	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.	No income restrictions. Anyone can contribute to the account.	Account owner retains control of assets. Can use money for any person.	Minimum return guaranteed by the U.S. government provided, the bonds are held to maturity.
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.	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.	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.	No tax-deferred growth. Student gains control of money at age of majority. No five-year accelerated gift tax exclusion.	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.	Low rate of return. Does not cover books or room and board. No tax deduction if MAGI is $80,600 or above ($128,400 if married and filing jointly).

* 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.

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

²Modified Adjusted Gross Income (MAGI) limits listed reflect limits for the 2007 tax year.

³ The new beneficiary must be a member of the family of the previous beneficiary, as defined in the Program Disclosure Statement.

⁴ Assumes no other gifts are made to the beneficiary in the same tax year.

⁵ Prices are subject to change.

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.