Compare savings options

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

YEAR 2018 RULES529 PlanQualifying U.S. Savings Bonds
Federal Income TaxNon-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expensesTax-deferred for federal; tax-free for state; certain post-1989 EE and I bonds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 TreatmentContributions treated as completed gifts; apply $15,000 annual exclusion, or up to $75,000 with 5-year electionNo gift as qualifying bonds must be owned by the parent
Federal Estate Tax TreatmentValue removed from donor's gross estate; partial inclusion for death during a 5-year election periodValue included in bond owner's gross estate
Maximum InvestmentEstablished by the program; many in excess of $300,000 per beneficiary$10,000 face value per year, per owner, per type of bond
Qualified ExpensesTuition, fees, books, computers and related equipment, supplies, special needs; room and board for minimum half-time studentsTuition and fees
Able to Change BeneficiaryYes, to another member of the beneficiary's familyNot applicable
Time/Age RestrictionsNone unless imposed by the programBond purchaser must be at least 24 years old at time of bond issuance
Income RestrictionsNoneInterest exclusion phases out for incomes between $117,250 and $147,250 (joint filers) or $78,150 and $93,150 (single)
Federal Financial AidCounted as asset of parent if owner is parent or dependent studentCounted as asset of bond owner
InvestmentsMenu of investment strategies as developed by the programInterest-earning bond backed by full faith and credit of U.S. government
Use for Nonqualifying ExpensesWithdrawn earnings subject to federal tax and 10% penaltyNo penalty; interest on redeemed bonds included in federal income

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