Compare savings options

Summarizes and compares the features of 529 plans, ESAs, UTMAs, IRAs, and education savings bonds.

YEAR 2013 RULES	529 Plan	Qualifying U.S. Savings Bonds
Federal Income Tax	Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses	Tax-deferred for federal; tax-free for state; certain post-1989 EE and I bonds may be redeemed federal tax-free for qualified higher education expenses
Federal Gift Tax Treatment	Contributions treated as completed gifts; apply $14,000 annual exclusion, or up to $70,000 with 5-year election	No gift as qualifying bonds must be owned by the parent
Federal Estate Tax Treatment	Value removed from donor's gross estate; partial inclusion for death during a 5-year election period	Value included in bond owner's gross estate
Maximum Investment	Established by the program; many in excess of $300,000 per beneficiary	$10,000 face value per year, per owner, per type of bond
Qualified Expenses	Tuition, fees, books, supplies, equipment, special needs; room and board for minimum half-time students	Tuition and fees
Able to Change Beneficiary	Yes, to another member of the beneficiary's family	Not applicable
Time/Age Restrictions	None unless imposed by the program	Bond purchaser must be at least 24 years old at time of bond issuance
Income Restrictions	None	Interest exclusion phases out for incomes between $112,050 and $142,050 (joint filers) or $74,700 and $89,700 (single)
Federal Financial Aid	Counted as asset of parent if owner is parent or dependent student	Counted as asset of bond owner
Investments	Menu of investment strategies as developed by the program	Interest-earning bond backed by full faith and credit of U.S. government
Use for Nonqualifying Expenses	Withdrawn earnings subject to federal tax and 10% penalty	No penalty; interest on redeemed bonds included in federal income