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Prepaid Affordable College Tuition (PACT) Program (HTML VERSION)
Alabama's Prepaid Affordable College Tuition (PACT) Program suspended its enrollment in 2009 and new applications are no longer being accepted. The program has offered a four-year package and one-year package covering tuition and fees at any Alabama public college or university, convertible to private and non-Alabama institutions based on a formula.
Savingforcollege.com's 5-Cap Ratings provides an evaluation and comparison of 529 plans, utilizing a formula that examines dozens of factors grouped into the following categories. (Scale 0 to 5; 5 is highest)
Did you know?
Residents are not limited to investing in their own state's plan. Another state may offer a plan that performs better and has lower fees. If there is no tax break offered for in-state investors ... shop around!
Also, the plan chosen does not affect which state the student enrolls in. An investor can live in NY, invest in a plan from NV and send a student to college in FL.
Closed to new enrollment as of 2009.
Board of Trustees of the Trust Fund, chaired by the State Treasurer
Normal enrollment period is September through December. Closed to new enrollments as of 2009.
U.S. citizens and resident aliens at least 19 years old, UGMA/UTMA custodians, and approved legal entities.
The beneficiary must be in the 9th grade or below and under the age of 18 at the time of enrollment. Contract benefits must generally be used within 10 years of the beneficiary's projected college entrance date.
In the last enrollment period (2008), the price for a four year contract ranged from $23,938 for a newborn to $25,650 for a ninth grader. The price for a one year contract ranged from $6,408 for a newborn to $6,856 for a ninth grader.
Contract pays one to four years of undergraduate tuition and fees at Alabama public colleges and universities.
Weighted average tuition and mandatory fees charged the prior fall by public four-year institutions in Alabama not to exceed actual tuition and mandatory fees.
Lump sum, 60 monthly installments, or extended monthly payment plan. For contracts purchased during the 2008 enrollment period, the first payment was due February 1, 2009.
Fees & Expenses
Taxes and other Benefits
Contributions, including rollover contributions, to an Alabama 529 plan of up to $5,000 per year by an individual, and up to $10,000 per year by married taxpayers filing jointly who each make their own contributions, are deductible in computing Alabama taxable income.
A nonqualified withdrawal from an Alabama 529, plus 10 percent of the amount of the withdrawal, is included in Alabama taxable income to the extent of prior Alabama tax deductions. Outbound rollovers are also subject to recapture.
Alabama law exempts qualified distributions from an Alabama 529 plan but does not exempt distributions from a non-Alabama 529 plan.
Inbound rollovers are not subject to Alabama tax. The full amount rolled over can be deducted subject to the $5,000 or $10,000 annual maximum. Outbound rollovers are treated as nonqualified withdrawals.
Does participation in the program provide beneficiaries with any advantages in qualifying for resident tuition status at state institutions?
Distributions & Terminations
Payments are made directly to the college or university.
Accepts requests to transfer contract ownership ($20 fee).