Compare savings options
Summarizes and compares the features of 529 plans, 529 ABLE plans, ESAs, UTMAs, IRAs, and education savings bonds.
|YEAR 2021 RULES||Coverdell Education Savings Accounts||Roth IRA||Traditional IRA|
|Federal Income Tax||Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses and qualified K-12 expenses also excluded||Non-deductible contributions; withdrawn earnings excluded from income after age 59 1/2 – and five years; 10% penalty on early withdrawals waived if used for qualified higher education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||Deductible or non-deductible contributions; withdrawals in excess of basis subject to tax; 10% penalty on early withdrawals waived if used for qualified higher education expenses||Federal Gift Tax Treatment||Contributions treated as completed gifts; apply $15,000 annual exclusion||No gift involved||No gift involved||Federal Estate Tax Treatment||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||$2,000 per beneficiary per year combined from all sources||$6,000 ($7,000 for taxpayers age 50 and over) per year||$6,000 ($7,000 for taxpayers age 50 and over) per year||Qualified Expenses||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||No restrictions||Able to Change Beneficiary||Yes, to another member of the beneficiary's family||Not applicable||Not applicable||Time/Age Restrictions||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||Withdraw without penalty only after age 59 1/2||Income Restrictions||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)||Must have taxable compensation; amount deductible reduced or eliminated for taxpayers who participate in an employer retirement plan and have income above certain limits||Federal Financial Aid||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||Not counted as asset; withdrawals of principal and interest counted as financial aid income||Investments||Broad range of securities and certain other investments||Broad range of securities and certain other investments||Broad range of securities and certain other investments||Use for Nonqualifying Expenses||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||Taxable portion of withdrawal prior to age 59 1/2 also subject to 10% early withdrawal penalty|