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Summarizes and compares the features of 529 plans, ESAs, UTMAs, IRAs, and education savings bonds.
|YEAR 2017 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|Federal Income Tax||Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses||Tax-deferred for federal; tax-free for state; certain post-1989 EE and I bonds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, computers and related equipment, supplies, 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 $115,750 and $145,750 (joint filers) or $77,200 and $92,200 (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the program||Interest-earning bond backed by full faith and credit of U.S. government||Use for Nonqualifying Expenses||Withdrawn earnings subject to federal tax and 10% penalty||No penalty; interest on redeemed bonds included in federal income|