FAQs

Enroll online in about 10 minutes.

Enrollment kits are also available for download, or you can request one be mailed to you.

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.

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

Yes. The Account Owner may change the Designated Beneficiary at any time without adverse federal income tax consequences if the new Designated Beneficiary is a Member of the Family of the current Designated Beneficiary. The Account Owner may also change the Portfolios in which the Account is invested when they change the Designated Beneficiary. If the new Designated Beneficiary is not a Member of the Family of the current Designated Beneficiary, then the change is treated as a Nonqualified Withdrawal that is subject to taxes and a penalty.

A Member of the Family is anyone who is related to the current Designated Beneficiary in one of the following ways:

• A son or daughter, or a descendant of either;
• A stepson or stepdaughter;
• A brother, sister, stepbrother, or stepsister;
• The father or mother, or an ancestor of either;
• A stepfather or stepmother;
• A son or daughter of a brother or sister;
• A brother or sister of the father or mother;
• A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law;
• The spouse of the Designated Beneficiary or the spouse of any of the foregoing individuals; or
• A first cousin of the Designated Beneficiary.

For purposes of determining who is a Member of the Family, a legally adopted child of an individual is treated as the child of such individual by blood. The terms brother and sister include a half-brother or half-sister.

A change of the Designated Beneficiary of an Account or a transfer to an Account for another Designated Beneficiary may have federal gift tax or generation-skipping transfer tax consequences. You should consult your tax advisor under such circumstances.

To request a beneficiary change for your account, please log in online or complete and submit the Beneficiary Change Form.

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

If you don’t use all the funds in your account, you have a number of options.

1. You can leave the funds in the account in the event your beneficiary (or another member of the family) goes back to school later.
2. You can change the beneficiary to another member of the family for their college expenses.
3. You can roll over funds from an account to a Roth IRA, subject to certain limitations. See “What are the limitations and restrictions of a 529 Rollover to a Roth IRA?” below.
4. You can withdraw the funds as a nonqualified withdrawal. The earnings portion (not the amount you contributed) is subject to federal and state income taxes and a 10% federal penalty tax.
   • Alabama tax filers: In the event of a nonqualified withdrawal from the Plan, for Alabama state income tax purposes, an amount must be added back to the income of the contributing taxpayer in an amount of the nonqualified withdrawal plus ten (10%) percent of such amount withdrawn. Such amount will be added back to the income of the contributing taxpayer in the tax year that the nonqualified withdrawal was distributed.
   • Please consult with your tax professional.

We encourage you to consider naming a trusted family member or friend as a Successor Account Owner. The Successor Account Owner would take over ownership of the account in the event of the death of the Account Owner.

The plan is very flexible. You can contribute by:

• Sending a check.
• Establishing an automatic investment plan.
• Rolling over an out-of-state 529 plan.
• Invite family and friends to make a contribution to your account through CollegeCounts GiftED.
• Establishing a payroll deduction at work (check with employer for availability).
• Transferring reward dollars earned with a CollegeCounts 529 VISA Card.

Yes, an account owner may request a rollover to transfer funds from another 529 plan to CollegeCounts. Before requesting a rollover, please consult your financial advisor and tax professional.

Such a rollover transaction will be treated as an income tax-free qualified rollover distribution provided it has been more than twelve (12) months since any previous rollover for that beneficiary or if the beneficiary of the account is changed to a Member of the Family of the current beneficiary.

There may be potential adverse tax consequences if the transfer or rollover is not a qualified rollover. For additional information see the Tax Center. Investors should consult with a tax advisor.

A minimum Contribution is not required, nor do you have to contribute to your Account every year. The Plan has no minimum initial and subsequent required Contributions to an Account.

The Maximum Account Balance limit is $475,000.

Accounts that have reached the Maximum Account Balance may continue to accrue earnings, but additional Contributions will not be accepted.

Effective January 1, 2024, CollegeCounts 529 assets can be rolled over directly into a Roth IRA.

IMPORTANT: The following limitations and restrictions apply:

• The CollegeCounts 529 Account must have been maintained at least 15 years.
• Only contributions (and any earnings attributable thereto) made to the CollegeCounts Account more than five years prior can be rolled over.
• The Roth IRA rollover must be made in a direct trustee-to-trustee transfer to a Roth IRA account maintained for the benefit of the CollegeCounts Designated Beneficiary.
• Rollover contributions cannot exceed the IRA contribution limit for that tax year ($7,000 in 2025) and is reduced by any “regular” traditional or Roth IRA contributions made by the beneficiary in that year.
• The aggregate amount for all years of Roth IRA Rollovers for the same Designated Beneficiary from all 529 qualified tuition programs may not exceed $35,000 per beneficiary over their lifetime.

Account Owners should consult their own tax and financial professionals before making a Roth IRA Rollover.

Parents, grandparents, other relatives—anyone, really—can contribute to a CollegeCounts 529 account on behalf of the beneficiary. Contributions made by Alabama taxpayers may be deductible for Alabama state income tax purposes up to $5,000 ($10,000 if married filing jointly and both spouses contribute). ^{Footnote 1}

Contributions to the CollegeCounts 529 Fund are deductible on a state of Alabama income tax return up to:

• $5,000 per Alabama taxpayer.
• $10,000 for married Alabama taxpayers filing jointly if both actually contribute.

The amount contributed by an Alabama taxpayer during a tax year is deductible from Alabama income in an amount not to exceed $5,000 for a single return or $10,000 for a joint return for that tax year. If you also contribute to another Alabama 529 account, your maximum total deduction on all contributions is still $5,000 per year ($10,000 for married couples filing jointly). Rollovers to another state’s 529 plan or nonqualified withdrawals may be subject to recapture. For additional information see the Tax Center.

The contribution deadline is December 31st each year.

December 31 deadline for contributions. For Alabama taxpayers, contributions to CollegeCounts are tax deductible. Contributions are deductible up to $5,000 per year ($10,000 if married filing jointly and both spouses contribute).

To be deductible for a calendar year you must make the contribution before the end of that given calendar year. Contributions postmarked on or before December 31, should be treated as having been made in the year in which it was mailed.

Federal income taxes are deferred while in an account, and such earnings are free from federal and Alabama state income tax if they are distributed as part of a Qualified Withdrawal. Contributions are not deductible for federal income tax purposes.

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.

Qualified higher education expenses (as defined in Section 529 of the Internal Revenue Code) include:

• tuition, fees, books, supplies, and equipment required for enrollment or attendance of a Designated Beneficiary at an Eligible Educational Institution;
• certain room and board expenses incurred by students who are enrolled at least half-time. The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts:
1. The allowance for room and board, as determined by the Eligible Educational Institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student;
2. The actual amount charged if the student is residing in housing owned or operated by the Eligible Educational Institution;
• expenses for special needs services incurred in connection with a special needs Designated Beneficiary’s enrollment or attendance at an Eligible Educational Institution;
• expenses for the purchase of computer or certain peripheral equipment, computer software, or Internet access and related services, if such equipment, software, or services are to be used primarily by the Designated Beneficiary during any of the years the Designated Beneficiary is enrolled at an Eligible Educational Institution. This does not include expenses for computer software for sports, games, or hobbies unless the software is predominately educational in nature;
• tuition, fees, books, supplies, and equipment required for participation of the Designated Beneficiary in an Apprenticeship Program;
• payments on Qualified Education Loans of the Designated Beneficiary or a sibling of the Designated Beneficiary provided that the total amounts of distributions from all 529 qualified tuition programs to such individual for loan repayment do not exceed $10,000;
• Qualified Elementary and Secondary Expenses (tuition and certain other expenses in connection with the Designated Beneficiary’s enrollment or attendance at an elementary or secondary public, private or religious school, subject to an annual $10,000 (for 2025; $20,000 after 2025) per Designated Beneficiary limit); and
• Qualified Postsecondary Credentialing Expenses.

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.

Distributions can be payable to the Account Owner, Beneficiary or the school. Keep in mind the 1099-Q tax form is issued to the account owner for any distributions paid directly to them. The 1099-Q is issued to the beneficiary for any distributions paid directly to the beneficiary or the college. Please discuss any tax-related questions with your tax professional.

PLEASE NOTE: The earnings portion of a non-qualified withdrawal is subject to federal income tax and 10% federal penalty tax. In addition, Alabama provides in the event of a non-qualified withdrawal an amount that must be added back to the income of the contributing taxpayer. The amount to be added back will be the amount of the non-qualified withdrawal plus 10% of the amount withdrawn (additional information on tax 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.

Money from a CollegeCounts account can be paid to the account owner, beneficiary, to the account owner or beneficiary’s bank account, or to an eligible educational institution.

Payments to account owners, beneficiaries, and bank accounts

An account owner may request a withdrawal online or by downloading and submitting the Withdrawal Request Form.

Be sure to plan ahead when requesting a withdrawal. Generally, if a request is received in good order on a business day prior to the close of the markets (typically 3 p.m. Central time), the investments will be sold at that day’s closing prices, and a check will be mailed the following business day. Please plan ahead and allow sufficient mail time. For withdrawals payable to the account owner or beneficiary’s bank account, please allow several business days for your bank to process the payment and credit your account.

Payments to eligible institutions

CollegeCounts can also make an electronic payment (or check) directly to a college or university.

For more information about withdrawals from an account, please visit the Use of Funds page.

If you receive a refund from an Eligible Educational Institution for Qualified Higher Education Expenses that were paid from money withdrawn from your Account, you can:

1. Pay for Other Qualified Higher Education Expenses – You can use the funds to pay other Other Qualified Higher Education Expenses incurred by that beneficiary in the same calendar year.
2. Recontribute Refunded Amounts to a 529 account – If a student receives a refund of Qualified Higher Education Expenses that were treated as paid by a 529 distribution, the student can recontribute these amounts into any 529 account for which they are the beneficiary within 60 days after the date of the refund. The amount recontributed cannot exceed the amount of the refund.

You should consult with your financial, tax or other advisor regarding your individual situation.

There are several general rules of thumb when investing in a 529 plan. We recommend that you review with your own advisors as well as your high school guidance counselor for information regarding your own situation.

If a parent is the account owner of a CollegeCounts account, up to 5.64% of the value of the account may be included in the Expected Family Contribution calculation for federal financial aid purposes. A custodial 529 account (ie: UTMA 529 or UGMA 529 account) is typically treated as a parental asset (up to 5.64% of the value included) for purposes of the federal aid application.

Withdrawals from a 529 may also receive favorable treatment. Generally, withdrawals from a parent-owned 529 account are not includible in the income portion of the financial aid calculation. Beginning in December 2023 for the 2024-25 academic year, FAFSA will no longer report distributions from a grandparent’s 529 plan as untaxed student income, which previously had the potential to drastically reduce a student’s aid eligibility and cash support.

Financial aid rules may change at any time. Visit studentaid.gov for details and specifics regarding 529’s and their financial aid treatment.

CollegeCounts has the following investment options available:

• 3 Age-Based Portfolios
• 6 Target Portfolios
• 26 Individual Fund Portfolios

You can learn more under Investment Options.

The Account Owner may change the Portfolio or Portfolios in which his or her Account is invested twice per calendar year, or upon a change of the Designated Beneficiary. If an Account Owner has multiple Accounts in the Plan for the same Designated Beneficiary, or multiple Accounts in the Plan and other State of Alabama 529 programs, the Account Owner may change the Portfolios in all such accounts without tax consequences, so long as the changes to all of the Accounts are made at the same time and no more frequently than twice per calendar year or upon a change of Designated Beneficiary.

The Portfolios, except for the Vanguard Cash Reserves Federal Money Market 529 Portfolio, and the Bank Savings 529 Portfolio, do not make distributions of their income, including dividends, interest and capital gains. The dividends and capital gains distributions of the underlying investments received by the Portfolios are not distributed by the Portfolios as earnings; such dividends and distributions are reinvested in the applicable underlying mutual fund(s) and are reflected in the NAV.

The plan has no annual account fee. The all-in costs for the Investment Options are:

The all-in costs include the 0.17% program management fee and the expenses of the underlying investments. Review the CollegeCounts Program Disclosure Statement or the Portfolio Performance page for a detailed listing of all Investment Options and expenses.

Qualified higher education expenses (as defined in Section 529 of the Internal Revenue Code) include:

• tuition, fees, books, supplies, and equipment required for enrollment or attendance of a Designated Beneficiary at an Eligible Educational Institution;
• certain room and board expenses incurred by students who are enrolled at least half-time. The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts:
1. The allowance for room and board, as determined by the Eligible Educational Institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student;
2. The actual amount charged if the student is residing in housing owned or operated by the Eligible Educational Institution;
• expenses for special needs services incurred in connection with a special needs Designated Beneficiary’s enrollment or attendance at an Eligible Educational Institution;
• expenses for the purchase of computer or certain peripheral equipment, computer software, or Internet access and related services, if such equipment, software, or services are to be used primarily by the Designated Beneficiary during any of the years the Designated Beneficiary is enrolled at an Eligible Educational Institution. This does not include expenses for computer software for sports, games, or hobbies unless the software is predominately educational in nature;
• tuition, fees, books, supplies, and equipment required for participation of the Designated Beneficiary in an Apprenticeship Program;
• payments on Qualified Education Loans of the Designated Beneficiary or a sibling of the Designated Beneficiary provided that the total amounts of distributions from all 529 qualified tuition programs to such individual for loan repayment do not exceed $10,000;
• Qualified Elementary and Secondary Expenses (tuition and certain other expenses in connection with the Designated Beneficiary’s enrollment or attendance at an elementary or secondary public, private or religious school, subject to an annual $10,000 (for 2025; $20,000 after 2025) per Designated Beneficiary limit); and
• Qualified Postsecondary Credentialing Expenses.

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.

You can download a copy of the latest audits here:

• Audited Financial Statements (Fiscal Year end September 30, 2024)
• Audited Financial Statements (Fiscal Year end September 30, 2023)

The CollegeCounts Board acts as trustee and is responsible for the overall administration of the Program. The Board has delegated day-to-day administration of the Program to the Treasurer. The Board has selected Union Bank & Trust Company to serve as Program Manager.