The Office of State Treasurer is proud to offer 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, himself. Withdrawals from the account can be used to pay for tuition, fees, books, 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.

To learn more about these fine programs, review the comparison chart below and visit these links or call us at (800) 252-7228 (PACT) or (866) 529-2228 (Alabama Higher Education 529 Fund).

 

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Alabama PACT and Alabama Higher Education 529 Fund - Compare Today!

Use this chart to compare Alabama's two college savings programs - the Alabama Prepaid Affordable College Tuition Program and the Alabama Higher Education 529 Fund.

 

	Alabama Higher Education 529 Fund	Alabama PACT Program
Contribution Limits	Maximum of up to $300,000. As low as $25 - $250 to open an account. As low as $25 per month.	One-Year Contract Pricing Chart Four-Year Contract Pricing Chart
Account Control	Account owner (not beneficiary).	Account owner (not beneficiary).
Tax Benefits	Tax-deferred growth—your investment is exempt from annual federal income taxes. Tax-exempt withdrawals—your qualified withdrawals are exempt from both Alabama state income taxes and federal income taxes.	Tax-deferred growth—your investment is exempt from annual federal and state income taxes. Exempt from federal and state income tax for qualified withdrawals for higher education.
Income Limitations	None.	None.
Investment Options	Choose from three strategies: Years to Enrollment Portfolios: with five time horizons and three risk tolerance levels. Portfolios automatically rebalance as the beneficiary’s time horizon changes. Fixed Portfolios: 100% Equity; 100% Bonds; 50% Bonds/50% Cash. Individual Fund Portfolios: Choose from stock and bond, stock, global, international and bond portfolios. The assets of each portfolio are invested entirely in a single underlying Van Kampen mutual fund.	Not applicable. Trust fund is invested by professional managers.
Ability to Change Beneficiary	May transfer to another member of the beneficiary’s family.	May transfer to another member of the beneficiary’s family.
Conditions for Use	Can be used toward tuition, room and board, books and fees at any accredited public or private college, trade or graduate school nationwide.	Can be used toward  tuition and qualified fees at any Alabama public college or university.   Can be used at private or out-of-state institutions—at an amount that is equal to the average tuition of Alabama’s public four-year universities.
Financial Aid Considerations	Considered account owner's assets.	Considered beneficiary’s assets.
Gift and Estate Planning Benefits	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. Accelerate gifting—contribute five years of gifts in one year ($120,000 for married couples) on behalf of a beneficiary.	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. Accelerate gifting—contribute five years of gifts in one year ($120,000 for married couples) on behalf of a beneficiary.
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. Penalty-free withdrawals for death, disability and scholarship.	No income restrictions. Anyone can contribute to the account. Account Owner retains control of assets. May transfer account to another member of the beneficiary’s family. Professional investment management by managers. Penalty-free withdrawals for death, disability and scholarship.

The Alabama Higher Education 529 Fund “The Program” and PACT are sponsored by the State of Alabama.

An investment in the Program is not a bank deposit or insured or guaranteed and you could lose money if you participate in the Program.

For non-Alabama residents, favorable state tax treatment for investing in a Section 529 Plan may be limited to investment in your state’s plan. Van Kampen and the State of Alabama Treasurer’s Office, including Alabama State Treasurer Kay Ivey, do not offer tax and/or legal advice. Consult with your tax advisor.

Contact your financial advisor, or click here, for a Program Disclosure Statement and its Supplement, which include information on investment options, risk factors, fees, expenses, and possible tax consequences. Please read them carefully before investing.

The Alabama Higher Education 529 Fund is distributed by Van Kampen Funds Inc.