Planning for your child’s college education before she’s out of diapers may seem premature, but she will be throwing her cap in the air, high school diploma in hand, before you know it.
The Office of State Treasurer in Alabama offers two flexible investing options to assist families in planning for the future education of a child or loved one—the Prepaid Affordable College Tuition Program (PACT) and the Alabama Higher Education 529 Fund.
Through the PACT Program, a four-year contract or a one-year contract can be purchased to prepay college tuition and qualified fee payments at any Alabama public college or university. PACT may also be used at private or out-of-state institutions. Flexible plans are available to pay for the contract that is priced according to the age of the child. The 2008 PACT open enrollment period will begin in October and continue through the end of December.
The Alabama Higher Education 529 Fund allows individuals to participate in an investing program, managed by Van Kampen Investments, in which they may select from a number of professionally crafted investment strategies. The beneficiary of the account may be a child, adult or even the individual, him/herself. Withdrawals from the account can be used to pay for tuition, fees, books and room and board at any accredited college, trade or graduate school. There is a direct-sold investment option available for Alabama residents that allows them to avoid upfront commissions and costs as well as the state administrative fee. Enrollment is open year-round. After the initial deposit of $250, additional contributions may be made anytime.
Both programs feature tax advantages and flexibility in allowing benefits to be transferred to other members of the family. Certainly, individuals may invest in one or both programs and may choose the option that best meets their financial situation.
Georgia also offers a 529 plan, now called The Path2College 529 Plan, an authority operated under the Georgia Office of Treasury and Fiscal Services (OTFS).
With a Path2College 529 Plan account, any earnings in your account are free from federal income taxes when used for qualified higher education expenses. Then, when it’s time for college, the money you withdraw for qualified higher education expenses is also tax-free.
Contributions and earnings portion of any withdrawals used to pay for qualified higher education expenses will be free from federal and Georgia state income tax. This federal income taxfree treatment of qualified withdrawals and other federal tax benefits are permanently in place for 529 plans through the passage of the Pension Protection Act of 2006.
To learn more about these Alabama programs, visit these links or call (800) 252-7228 (PACT) or (866) 529-2228 (Alabama Higher Education 529 Fund).
For more information on Georgia’s The Path2College 529 Plan, call 1-877-424-4377 or visit www.Path2College529Plan.com.
Sources: treasury.state.al.us/content/College_Savings.htm
path2college529.com/ourplan/index.html
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