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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 2023 RULES | 529 Plan | UGMA/UTMA |
|---|---|---|
| Federal Income Tax | Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses | Earnings and gains taxed to minor; first $1,100 of unearned income is tax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 | 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 | 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 | Maximum Investment | Established by the program; many in excess of $400,000 per beneficiary | 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. | Able to Change Beneficiary | Yes, to another member of the beneficiary's family | No; represents an irrevocable gift to the child | Time/Age Restrictions | None unless imposed by the program | Custodianship terminates when minor reaches age established under state law (generally 18 or 21) | Income Restrictions | None | None | Federal Financial Aid | Counted as asset of parent if owner is parent or dependent student | Counted as student's asset | Investments | Menu of investment strategies as developed by the program | As permitted under state laws | Use for Nonqualifying Expenses | Withdrawn earnings subject to federal tax and 10% penalty | Funds must be used for benefit of the minor |
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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 | New Jersey | NJBEST 529 College Savings Plan |
| 2 | Utah | my529 |
| 3 | Kansas | Schwab 529 College Savings Plan |
Three-year rankings are based on a plan's average annual investment returns over the last three years.
| State | Plan Name | |
|---|---|---|
| 1 | South Dakota | CollegeAccess 529 (Direct-sold) |
| 2 | Wisconsin | Edvest |
| 3 | West Virginia | SMART529 WV Direct College Savings Plan |
Five-year rankings are based on a plan's average annual investment returns over the last five years
| State | Plan Name | |
|---|---|---|
| 1 | West Virginia | SMART529 WV Direct College Savings Plan |
| 2 | Indiana | CollegeChoice 529 Direct Savings Plan |
| 3 | District of Columbia | DC College Savings Plan |
10-year rankings are based on a plan's average annual investment returns over the last ten years.
| State | Plan Name | |
|---|---|---|
| 1 | West Virginia | SMART529 WV Direct College Savings Plan |
| 2 | South Carolina | Future Scholar 529 College Savings Plan (Direct-sold) |
| 3 | Alaska | T. Rowe Price College Savings Plan |
