COLLEGE SAVINGS 101

Compare savings options

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

YEAR 2017 RULESUGMA/UTMA
Federal Income TaxEarnings and gains taxed to minor; first $1050 of unearned income is tax exempt; unearned income over $2,100 for certain children under age 24 is taxed at parents rate
Federal Gift Tax TreatmentTransfers treated as completed gift; apply $14,000 annual gift exclusion
Federal Estate Tax TreatmentValue removed from donor's gross estate unless donor remains as custodian
Maximum InvestmentNo limit
Qualified ExpensesNo restrictions
Able to Change BeneficiaryNo; represents an irrevocable gift to the child
Time/Age RestrictionsCustodianship terminates when minor reaches age established under state law (generally 18 or 21)
Income RestrictionsNone
Federal Financial AidCounted as student's asset
InvestmentsAs permitted under state laws
Use for Nonqualifying ExpensesFunds must be used for benefit of the minor
 

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