529 News

Alabama bills to provide deduction, remove out-of-state penalty

(March 17, 2008) - The Alabama legislature is considering legislation that would:
(1) Provide an Alabama tax deduction of up to $5,000 per year for contributions to an Alabama 529 plan, and further provide that a nonqualified withdrawal from an Alabama 529 plan, plus 10 percent of the withdrawal, be included in Alabama taxable income (HB 43);
(2) Would provide withdrawal parity by exempting from Alabama income a distribution from any 529 plan that is for qualified higher education expenses or is eligible for the 10-percent federal penalty waiver (HB 694).

Both bills have an effective date for years beginning on or after January 1, 2008.

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