COLLEGE SAVINGS 101

Compare savings options

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

YEAR 2024 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Federal Income Tax	Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses	Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses and qualified K-12 expenses also excluded	Non-deductible contributions; withdrawn earnings excluded from income after age 59 1/2 – and five years; 10% penalty on early withdrawals waived if used for qualified higher education expenses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 $17,000 annual exclusion, or up to $85,000 with 5-year election	Contributions treated as completed gifts; apply $17,000 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

Top 529 College Savings Plans

One-year rankings are based on a plan's average investment returns over the last 12 months.

	State	Plan Name
1	Nevada	USAA 529 Education Savings Plan
2	Florida	Florida 529 Savings Plan
3	New Jersey	NJBEST 529 College Savings Plan

View Full List Find Plans in your State