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FAQs

Who can open an account?

An account can be established by an individual, a UGMA/UTMA custodian, certain legal entities, or a trust. There are no income or residency requirements.

How do I open an account?

Your investment professional can guide you through the steps to get enrolled.

Who can be a beneficiary?

Anyone, including yourself, can be named as a beneficiary. There are no age, income, or residency limitations. Each account can have one designated beneficiary.

Who can make contributions?

Parents, grandparents, other relatives—anyone, really—can contribute to a CollegeCounts 529 Fund account on behalf of the beneficiary.

What is the Alabama state income tax deduction for contributions to the CollegeCounts 529 Fund?

Contributions to the CollegeCounts 529 Fund are Alabama tax deductible up to:

• $5,000 per Alabama taxpayer;
• $10,000 for married Alabama taxpayers filing a joint return where both taxpayers are making such contributions.

This deduction is allowed as an adjustment to income on the Alabama income tax return for contributions made to the CollegeCounts 529 Fund (or to the PACT program which is closed to new investors). For additional information see the Tax Q&A.

How are contributions made?

The plan is very flexible. You can contribute by:

• Sending a check.
• Establishing an automatic investment plan.
• Rolling over funds from another 529 plan.
• Establishing a payroll deduction at work (check with employer for availability).
• Transferring reward dollars earned with a CollegeCounts 529 Rewards Visa^® Card.

Can I transfer assets from another 529 plan?

Yes. You can complete a rollover form to transfer assets from another 529 plan and gain the benefits of the Alabama state income tax deduction. A same-beneficiary rollover/transfer is allowed once in a 12-month period. Additional transfers are allowed but require a change of beneficiary. For additional information see the Tax Q&A. Check with your investment professional for further assistance with rollovers.

Is the Program Audited?

Each year an independent public accountant selected by the Program Manager will audit the Plan. The auditors will examine financial statements for the Plan. The Board may also conduct audits of the Program and Trust.

Where can I Obtain a Copy of the Audited Financial Statements?

You can download copies of the latest audits by clicking here:

• Fiscal Year September 30, 2012 Audited Financial Statements
• Fiscal Year September 30, 2011 Audited Financial Statements
• Audited Financial Statements (August 2, 2010 –September 30, 2010)

Does the beneficiary have to attend a school in Alabama?

No. Many beneficiaries will attend Alabama schools; however, funds may be used at eligible schools nationwide and some foreign schools too.

Which schools are eligible institutions?

Any postsecondary educational institution that meets accreditation criteria and is eligible to participate in Federal Student Aid programs is eligible. This includes institutions such as public and private colleges and universities; vocational, trade, technical, and professional institutions; and even some foreign schools. Check out a listing of eligible schools from the Department of Education.

What are qualified higher education expenses?

Qualified expenses are certain education-related expenses. The following are qualified higher education expenses for which withdrawals from an account may be used federal and Alabama state income tax-free: tuition, fees, supplies, equipment, books, and reasonable room and board (if the student is enrolled at least half-time).

How can I request a withdrawal from my account for qualified college expenses?

1. The quickest and easiest way is online. Log in and request a withdrawal online.
2. Complete and mail the Withdrawal Request Form.
3. Call with any questions and we’ll be happy to assist (toll-free at (866) 529 – 2228 from 7:30 AM to 6:00 PM, Central, Monday through Friday).

When I withdraw funds for college what additional items should I consider?

Make sure you keep receipts and invoices for any qualified college expenses in your tax files. CollegeCounts does not require any proof of your withdrawals, but you will want to have documentation of your expenses in the event the IRS has questions. We also recommend that you match any withdrawals from your CollegeCounts 529 account in the same calendar year as you pay the actual qualified college expense.

Checks can be made payable to either the Account Owner, Beneficiary or School. Keep in mind that the recipient of the withdrawal will receive the 1099-Q tax reporting form regarding the withdrawal. The Account Owner will receive the 1099-Q for any withdrawals payable to them. The Beneficiary will receive the 1099-Q for any withdrawals payable to the Beneficiary or the School. As you plan to take withdrawals, keep in mind any potential tax consequences when determining how you would like the check issued.

PLEASE NOTE: Earnings on a nonqualified withdrawal may be subject to federal and state income tax as well as 10% penalty tax. In addition, Alabama has a recapture provision (click here for additional information).

Make sure to consult with your tax professional regarding the best strategy when withdrawing funds. Your 529 withdrawals can be tax-free, but you should consider the various federal and state tax credits and deductions available as well. Typically you can use qualified college expenses for one tax credit, deduction, or tax-free 529 treatment. Generally you cannot “double dip” and use the same expenses for multiple tax credits, deductions, and tax-free withdrawal treatments from your 529. CONSULT your tax advisor for more information or advice.