Program Description
 

Higher Education 529 Fund

Uses
Use your investment for undergraduate or graduate studies at most accredited colleges and universities, in the United States or overseas, for qualified higher education expenses such as tuition, fees, room and board, books and supplies.

Account beneficiary can be changed to another family member. It is important to note that the new beneficiary must be a member of the previous beneficiary's family, as defined by Section 529 of the Code and the program disclosure statement, to avoid federal income tax consequences. Certain changes may result in gift and generation-skipping transfer taxes.

Eligibility
Anyone is eligible to participate. There are no adjusted gross income limits to meet, and no age requirements.

There are no state residency requirements. Any U.S. citizen or resident 19 or older, corporation, or trust and certain not-for-profit entities, can open an account.

Tax Advantages
Earnings can grow with federal taxation deferred.

Withdrawals are exempt from federal taxes, if used for qualified higher education expenses. However, note that withdrawals for non-qualified expenses may be subject to federal taxes as well as a 10 percent early withdrawal penalty. Contributions are not deductible for federal income tax purposes. For non-Alabama residents, if you or your beneficiary resides in or pays income taxes to a state that offers its own 529 college savings or prepaid tuition plan, that state may offer state or local tax benefits, but only for participation in such in-state plan.

Gift and Estate Tax Advantages
Account owner maintains control at all times, even after the beneficiary turns 18. If your student elects not to attend college, you, as the account owner, can change the beneficiary to another family member, gift the investment, or liquidate the account.

Participants may contribute up to $12,000 annually per beneficiary—or $24,000 per beneficiary for married couples filing jointly who elect to split gifts—without filing a gift-tax form or paying gift taxes. However, contributions to the plan are treated as a gift to the beneficiary for gift and generation-skipping transfer tax purposes so you need to be aware of this, particularly if you are making other gifts to the beneficiary during the same year. Also, please keep in mind that gift-giving limits are subject to certain exceptions.

Investment Options
Combine any of the portfolios to create your own asset-allocation model.

Years to Enrollment Portfolios are tailored to the beneficiary’s investment time horizon and the account
holder’s investment-risk tolerance. As the beneficiary gets closer to enrollment, the money in the account is automatically shifted to more conservative portfolios.

Fixed or Individual Fund Portfolios allow account holders to create customized investment portfolios with
their financial professionals.

Contributions
Establish an account for as little as $250 or set up an automatic investment plan for only $25 a month. Consult your tax advisor or financial professional regarding minimum initial investment requirements for Alabama residents.

Invest more than you can with many college investment plans. Contribute until the value of the account reaches $300,000, per beneficiary, during the life of the fund. Then, once you reach the maximum, your investment’s earnings may continue to grow—tax free. The maximum account balance per beneficiary is reviewed by the Board of Trustees of the Program Trust Fund and may change. The maximum applies to the aggregate value of accounts in the Higher Education 529 Fund and the Alabama Prepaid Affordable College Tuition (PACT) Program.

The State of Alabama does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It is not intended or written for—and cannot be used by—any taxpayer to avoid penalties that may be imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws are complex and constantly changing. You should always consult your legal or tax advisor for information concerning your individual situation.



 

    
           
   
 
 
   
 


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.