Potential Magazine November 2014 | Page 40

pay the way save on 2014 taxes Alabama’s 529: Reap Tax Benefits While Saving for College By Young Boozer, State of Alabama Treasurer Few investments allow parents to save for their teen’s college expenses while at the same time securing special tax advantages. But with Alabama’s CollegeCounts 529 plan, they can do just that. Under the 529 Section of the tax code, benefits are provided to families saving for future college fees, tuition and other expenses. Alabama taxpayers can receive a generous state income tax deduction of up to $5,000 ($10,000 for married couples filing jointly) on contributions to CollegeCounts each year. To enjoy tax advantages in 2014, however, Alabama 529 accounts must be opened by Dec. 31. CollegeCounts offers a number of quality investment fund options, including Vanguard, T. Rowe Price, Fidelity and PIMCO. There are no minimum contribution requirements, allowing families to open accounts and save a little each month. Like any investment fund, compounding interest can be earned and varies based on portfolio type and fluctuations in the economy. As college costs continue to rise—with annual costs at $10,730 for a two-year college and $18,391 for four-year—so does the importance of setting aside money to lessen future financial burden. 529 funds may be withdrawn and used at colleges, universities, trade schools and graduate schools at one-, two- and four-year schools in Alabama and across the U.S.—including vocational, technical, community, public and private colleges and universities. While it’s never too late to begin investing, time is winding down on the potential for tax savings as 2014 comes to a close. Visit CollegeCounts529.com to learn more or to sign up today. 40 www.potentialmagazine.com CollegeCounts Alabama’s 529 Fund provides: •  o minimum contribution N requirements, allowing parents, grandparents and guardians the ability to open accounts and deposit funds at any time through underlying investment funds, such as Vanguard, T. Rowe Price and Fidelity •  pecial tax benefits to Alabama S residents saving for future college expenses, including a generous state income tax deduction of up to $10,000 for married couples filing jointly ($5,000 for individuals) on contributions to CollegeCounts each year •  eneficiary transfer to another B member of the family if the original beneficiary elects not to attend college or trade school •  omplete withdrawal of funds C if unplanned medical or other financial needs arise (check with your tax professional for potential tax consequences) •  ccount continuation under A a successor (as designated by the original account holder or probate) should incapacitation or death occur