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.
Enroll online, or call 866.529.2228. Enrollment kits are also available for download, or they can be mailed to you for completion.
Anyone, including yourself, can be named as a beneficiary. There are no age, income, or residency limitations. Each account can have one designated beneficiary.
Parents, grandparents, other relatives—anyone, really—can contribute to a CollegeCounts 529 Fund account on behalf of the beneficiary.
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.
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 Q&A.
The plan is very flexible. You can contribute by:
- Sending a check.
- Establishing an automatic investment plan.
- Rolling over funds from another 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 Rewards Visa® Card.
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. There may be potential adverse tax consequences if the transfer or rollover is not a qualified rollover. For additional information see the Tax Q&A. Investors should consult with a tax advisor.
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 copies of the latest audits by clicking here:
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.
No. Many beneficiaries will attend Alabama schools; however, funds may be used at eligible schools nationwide and some foreign schools too.
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 the enrollment or attendance of a Designated Beneficiary at an eligible educational institution;
- Expenses for room and board (with certain limitations) incurred by the Designated Beneficiary who are enrolled at least half-time;
- Expenses for the purchase of computer or 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;
- Expenses for special needs services in the case of a special needs beneficiary which are incurred in connection with such enrollment or attendance;
- Expenses for fees, books, supplies, and equipment required for the participation of a Designated Beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act;
- Up to a lifetime maximum of $10,000 paid as principal or interest on any qualified education loan of the Designated Beneficiary or a sibling of the Designated Beneficiary. A sibling includes a brother, sister, stepbrother, or stepsister. For purposes of the $10,000 limitation, amounts treated as a qualified higher education expense with respect to the loans of a sibling of the Designated Beneficiary are taken into account for the sibling and not for the Designated Beneficiary.
- Up to a maximum of $10,000 per year in tuition expenses, incurred by a Designated Beneficiary, in connection with enrollment or attendance at an eligible elementary or secondary public, private or religious school.
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: 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 (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.
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:
- Pay for Other Qualified Higher Education Expenses – you can use the funds to pay other Qualified Higher Education Expenses incurred by that Beneficiary in the same calendar year.
- 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.
- EXTENSION OF TIME – for refunds made on or after February 1, 2020 and prior to May 16, 2020 the IRS has extended the time to recontribute funds to the greater of 60 days or July 15, 2020.
You should consult with your financial, tax or other advisor regarding your individual situation.
If you do not use all the funds in your account – you have a number of options.
- You can leave the funds in the account in the event your beneficiary (or another member of the family) goes back to school at a later date.
- You can change the beneficiary to another member of the family for their college expenses.
- 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.
- The quickest and easiest way is online. Log in and request a withdrawal online.
- Complete and mail the Withdrawal Request Form.
- 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).
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 2024) 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.