College savings opportunities needed

Published 12:00 am Wednesday, March 27, 2002

We’re glad to see the State of Alabama create additional college savings opportunities for parents.

The Legislature this year passed a bill that allows the implementation of a tax-exempt college savings. Administered by Van Kampen Investments, the fund will allow parents to begin investing with as little as $250 and additional payments as low as $25.

The savings will be placed in a range of investments, and earnings from those investments will be exempt for state and federal taxes as long as they are used to pay college expenses, such as room, board or tuition. And, unlike the PACTS pre-paid college tuition program already in place in Alabama, earnings from this program can be used for both undergraduate and graduate studies.

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The plan, known as a 529 plan because of its IRS code status, will cost the state nothing. It will be administered by the fees on investments.

Most important, though, it provides parents a tax-exempt incentive to save for their children’s college. When combined with the PACTS program, this new option creates an attractive opportunity for parents and investors. And, ultimately, it may help ensure that more of Alabama’s students are able to attend college here in our state.

And that’s an investment in our state, our economy and our future.  

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