Compare savings options
Summarizes and compares the features of 529 plans, 529 ABLE plans, ESAs, UTMAs, IRAs, and education savings bonds.
|YEAR 2022 RULES||529 Plan||Coverdell Education Savings Accounts||Roth IRA||Mutual Funds|
|Federal Income Tax||Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses||Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses and qualified K-12 expenses also excluded||Non-deductible contributions; withdrawn earnings excluded from income after age 59 1/2 – and five years; 10% penalty on early withdrawals waived if used for qualified higher education expenses||Earnings and gains taxed in year realized; special lower tax rates for certain dividends and capital gains||Federal Gift Tax Treatment||Contributions treated as completed gifts; apply $16,000 annual exclusion, or up to $80,000 with 5-year election||Contributions treated as completed gifts; apply $16,000 annual exclusion||No gift involved||No gift involved; direct payments of tuition not considered gifts||Federal Estate Tax Treatment||Value removed from donor's gross estate; partial inclusion for death during a 5-year election period||Value removed from donor's gross estate||Value included in the owner's gross estate||Value included in the owner's gross estate||Maximum Investment||Established by the program; many in excess of $400,000 per beneficiary||$2,000 per beneficiary per year combined from all sources||$6,000 ($7,000 for taxpayers age 50 and over)||No limit||Qualified Expenses||College tuition, fees, books, computers and related equipment, supplies, special needs; room and board for minimum half-time students. Up to $10,000 in tuition expenses for K-12 schools. Up to $10,000 in student loan repayment.||Tuition, fees, books, supplies, equipment, special needs; room & board for min. half- time students; additional types of K-12 expenses||College tuition, fees, books, computers and related equipment, supplies, special needs; room and board for minimum half-time students. Up to $10,000 in tuition expenses for K-12 schools. Up to $10,000 in student loan repayment.||No restrictions||Able to Change Beneficiary||Yes, to another member of the beneficiary's family||Yes, to another member of the beneficiary's family||Not applicable||Not applicable||Time/Age Restrictions||None unless imposed by the program||Contributions before beneficiary reaches age 18; use of account by age 30||Withdraw earnings tax-free only after five years and age 59 1/2||None||Income Restrictions||None||Contributions phase out for incomes between $190,000 and $220,000 (joint filers) or $95,000 and $110,000 (single filers). No annual inflation adjustment||Must have taxable compensation; contribution limit phases out for incomes between $204,000 and $214,000 (joint filers) or $129,000 and $144,000 (single)||None||Federal Financial Aid||Counted as asset of parent if owner is parent or dependent student||Counted as asset of parent if owner is parent or dependent student||Not counted as asset; withdrawals of principal and interest counted as financial aid income||Counted as asset of the owner||Investments||Menu of investment strategies as developed by the program||Broad range of securities and certain other investments||Broad range of securities and certain other investments||Mutual funds||Use for Nonqualifying Expenses||Withdrawn earnings subject to federal tax and 10% penalty||Withdrawn earnings subject to federal tax and 10% penalty||Taxable portion of withdrawal prior to age 59 1/2 also subject to 10% early withdrawal penalty||No restrictions|