Compare savings options
Summarizes and compares the features of 529 plans, 529 ABLE plans, ESAs, UTMAs, IRAs, and education savings bonds.
|YEAR 2023 RULES||529 Plan||UGMA/UTMA||Mutual Funds|
|Federal Income Tax||Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses||Earnings and gains taxed to minor; first $1,100 of unearned income is tax exempt; unearned income over $2,200 for certain children under age 24 is taxed at rates for estates and trusts||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||Transfers treated as completed gift; apply $17,000 annual gift exclusion||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 unless donor remains as custodian||Value included in the owner's gross estate||Maximum Investment||Established by the program; many in excess of $400,000 per beneficiary||No limit||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.||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||No; represents an irrevocable gift to the child||Not applicable||Time/Age Restrictions||None unless imposed by the program||Custodianship terminates when minor reaches age established under state law (generally 18 or 21)||None||Income Restrictions||None||None||None||Federal Financial Aid||Counted as asset of parent if owner is parent or dependent student||Counted as student's asset||Counted as asset of the owner||Investments||Menu of investment strategies as developed by the program||As permitted under state laws||Mutual funds||Use for Nonqualifying Expenses||Withdrawn earnings subject to federal tax and 10% penalty||Funds must be used for benefit of the minor||No restrictions|