FAQs

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FAQs2017-06-08T11:29:13-05:00
Who can open an account?2017-06-08T11:26:43-05:00

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?2017-06-08T11:25:33-05:00

Enroll online, or call 866.529.2228. Enrollment kits are also available for download, or they can be mailed to you for completion.

Who can be a beneficiary?2015-06-09T12:20:10-05:00

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?2015-06-09T12:20:19-05:00

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?2015-06-09T12:20:26-05:00

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.

How are contributions made?2017-06-08T11:28:40-05:00

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.
Can I transfer assets from another 529 plan?2015-06-09T12:20:50-05:00

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.

Is the Program audited?2015-06-09T12:21:34-05:00

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?2020-02-12T14:01:37-06:00
What is the legal structure of the Program?2017-06-08T11:25:02-05:00

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.

Does the beneficiary have to attend a school in Alabama?2015-06-09T12:27:05-05:00

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?2017-06-08T11:24:53-05:00

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?2017-06-08T11:24:43-05:00

Qualified higher education expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance; certain room and board expenses incurred by students who are enrolled at least half-time; the purchase of computer or peripheral equipment, computer software, or Internet access and related services if used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution; and certain expenses for special needs services needed by a special needs beneficiary.

K-12 Tuition Expense2020-03-26T16:36:32-05:00

Certain sections of the Alabama income tax statute refer to definitions in Code Section 529, as amended, including the definition of “Qualified Higher Education Expenses.”  For years after 2017, amendments to Code Section 529 treat withdrawals for tuition in connection with enrollment or attendance at an elementary or secondary school, whether public, private or religious, with a limit of $10,000 per year, per child collectively from all 529 plans to be “Qualified Higher Education Expenses.”  Consequently, a Designated Beneficiary may be able to use the amounts in a Plan Account to pay for K-12 Tuition Expenses (as defined in the Program Disclosure Statement) without incurring adverse tax consequences. However, the Act (which has not been amended since adoption of the Code Section 529 amendments referred to above) only covers expenses at “eligible educational institutions.” The definition of this term in Code Section 529 does not appear to cover K-12 schools, although Internal Revenue Service Publication 970 provides that an “eligible educational institution” “can be either an eligible postsecondary school or, for amounts paid from distributions made after December 31, 2017, an eligible elementary or secondary school.” Publication 970 does not have the same authority as Code Section 529.
 
The Program recommends that taxpayers seek tax advice from an independent tax advisor with respect to their ability to use the Program to pay K-12 Tuition Expenses without incurring adverse tax consequences.

Apprenticeship & Student Loan Payments2020-03-26T16:37:48-05:00

Federal Law Change (December 20, 2019). The Federal Consolidated Appropriations Act (2020) was signed into law by the President. It includes several new provisions related to 529 college savings accounts, effective for distributions made after December 31, 2018:
 
DISTRIBUTIONS FOR CERTAIN EXPENSES ASSOCIATED WITH REGISTERED APPRENTICESHIP PROGRAMS. Qualified higher education expenses shall include 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 (29 U.S.C. 50).
 
DISTRIBUTIONS FOR QUALIFIED EDUCATION LOAN REPAYMENTS. Qualified higher education expenses shall include amounts paid as principal or interest on any qualified education loan (as defined in section 221(d) of the Internal Revenue Code) of the designated beneficiary or a sibling (as defined in section 152(d)(2)(B) of the Internal Revenue Code) of the designated beneficiary. The amount of distributions treated as a qualified higher education expense under this paragraph with respect to the loans of any individual shall not exceed $10,000 (reduced by the amount of distributions so treated for all prior taxable years).
 
Please consult with your financial, tax and other advisor to learn more about how the federal law changes and state-based benefits (including any limitations) would apply to your specific circumstances.

When I withdraw funds for college what additional items should I consider?2020-04-14T10:39:51-05:00

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.

What can I do if I receive a refund from an Eligible Educational Institution?2020-04-16T12:53:05-05:00

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.

What if my beneficiary does not go to college or does not use all of the funds?2017-06-08T11:25:56-05:00

If you do not 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 at a later date.
  2. You can change the beneficiary to another member of the family for their college expenses.
  3. 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.
How can I request a withdrawal from my account for qualified college expenses?2020-03-26T16:38:34-05:00
  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).
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