Alabama 529 Plan
Alabama offers two 529 college savings plans. One is a traditional 529 savings plan called Alabama
CollegeCounts 529 and the other is a pre-paid tuition plan called Prepaid Affordable College Tuition Program
(PACT). Given the tax benefits for Alabama residents, one of these 529 plans may be a good option for
Alabama CollegeCounts 529 Plan
Alabama changed from Van Kampen to Union Bank for its 529 plan in 2010, and it's now called the CollegeCounts
529s. It is a traditional 529 plan that allows you to invest money today and reap tax benefits when you
withdraw it to pay for qualified education expenses.
Type: Direct and Advisor sold - this Alabama 529 plan can be purchased directly from the state
or through a local financial advisor.
Fund Family: PIMCO, Vanguard, T. Rowe Price, Fidelity
Minimums: There is no minimum contribution required to participate in Alabama's CollegeCounts
Maximum Contributions: Currently, you can contribute to your 529 plan accounts
until the balance for a designated beneficiary reaches $350,000. Once the limit is reached you
can't contribute more but earnings can continue to grow.
Tax Benefits: Good news for Alabama residents -- by investing in your state's 529 plan,
you don't pay Alabama state taxes on qualified withdrawals and earnings. You also get up to a $5,000 tax
deduction each year for contributions you make into your Alabama 529 plan. That equates to a $250 bonus. The
amount doubles to $10,000 for married couples filing jointly. You also get federal income tax benefits as you
do not pay income tax on your earnings. Out-of-state participants still get the federal tax benefits.
Other Benefits: The plan also offers a rewards Visa card called CollegeCounts 529 Rewards
Visa. You can get 1.529% (clever!) of your everyday spending deposited to your CollegeCounts account.
Residency: The Alabama Higher Education Fund 529 plan is open to all United States residents,
not just those in Alabama.
You can learn more about the Alabama 529 plan at the official web site.
Prepaid Affordable College Tuition Program (PACT)
Alabama also offers a pre-paid tuition plan that lets you lock in today's rates for college. It can be
used to pay for in-state public colleges as well as private and out-of-state colleges. However, private and
out-of-state college expenses will be prorated and may not be fully covered.
For more information about PACT, visit the official web