Compare savings options
Summarizes and compares the features of 529 plans, 529 ABLE plans, ESAs, UTMAs, IRAs, and education savings bonds.
|YEAR 2021 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|Federal Income Tax||Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses||Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses and qualified K-12 expenses also excluded||Non-deductible contributions; withdrawn earnings excluded from income after age 59 1/2 – and five years; 10% penalty on early withdrawals waived if used for qualified higher education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 $15,000 annual exclusion, or up to $75,000 with 5-year election||Contributions treated as completed gifts; apply $15,000 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) per year||No limit||Qualified Expenses||Tuition, fees, books, computers and related equipment, supplies, special needs and some room and board at eligible colleges and universities; costs of apprenticeship programs; up to $10,000 per year in tuition expenses at private, public and religious K-12 schools; Up to $10,000 in student loan payments for the beneficiary and each of the beneficiary's siblings.||Tuition, fees, books, computers and related equipment, supplies, special needs and some room and board at eligible colleges and universities and at K-12 institutions. For K-12 only, other required expenses including uniforms, some academic tutoring, and some supplementary items and services.||No restrictions||May include education, housing, transportation, employment training and support and other expenses that improve health, independence and/ or quality of life||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||Ability to contribute phases out for incomes between $190,000 and $220,000 (joint filers) or $95,000 and $110,000 (single)||Must have taxable compensation; contribution limit phases out for incomes between $196,000 and $206,000 (joint filers) or $124,000 and $139,000 (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|