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

YEAR 2014 RULES529 PlanCoverdell Education Savings Accounts
Federal Income TaxNon-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expensesNon-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses and qualified K-12 expenses also excluded
Federal Gift Tax TreatmentContributions treated as completed gifts; apply $14,000 annual exclusion, or up to $70,000 with 5-year electionContributions treated as completed gifts; apply $14,000 annual exclusion
Federal Estate Tax TreatmentValue removed from donor's gross estate; partial inclusion for death during a 5-year election periodValue removed from donor's gross estate
Maximum InvestmentEstablished by the program; many in excess of $300,000 per beneficiary$2,000 per beneficiary per year combined from all sources
Qualified ExpensesTuition, fees, books, supplies, equipment, special needs; room and board for minimum half-time studentsTuition, fees, books, supplies, equipment, special needs; room and board for minimum half-time students; additional categories of K-12 expenses
Able to Change BeneficiaryYes, to another member of the beneficiary's familyYes, to another member of the beneficiary's family
Time/Age RestrictionsNone unless imposed by the programContributions before beneficiary reaches age 18; use of account by age 30
Income RestrictionsNoneAbility to contribute phases out for incomes between $190,000 and $220,000 (joint filers) or $95,000 and $110,000 (single)
Federal Financial AidCounted as asset of parent if owner is parent or dependent studentCounted as asset of parent if owner is parent or dependent student
InvestmentsMenu of investment strategies as developed by the programBroad range of securities and certain other investments
Use for Nonqualifying ExpensesWithdrawn earnings subject to federal tax and 10% penaltyWithdrawn earnings subject to federal tax and 10% penalty