Compare savings options

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

YEAR 2021 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Federal Income TaxNon-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expensesTax-deferred for federal; tax-free for state; certain post-1989 EE and I bonds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 $400,000 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 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 and fees (excluding courses involving sports, games or hobbies that are not part of a degree or certificate-granting program), plus rollovers to a 529 plan, prepaid tuition plan or Coverdell ESA.
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 $123,550 and $153,550 (joint filers) or $82,350 and $97,350 (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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