Compare savings options
Summarizes and compares the features of 529 plans, 529 ABLE plans, ESAs, UTMAs, IRAs, and education savings bonds.
|YEAR 2023 RULES||Roth IRA||UGMA/UTMA|
|Federal Income Tax||Non-deductible contributions; withdrawn earnings excluded from income after age 59 1/2 – and five years; 10% penalty on early withdrawals waived if used for qualified higher education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 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||No gift involved||Transfers treated as completed gift; apply $17,000 annual gift exclusion||Federal Estate Tax Treatment||Value included in the owner's gross estate||Value removed from donor's gross estate unless donor remains as custodian||Maximum Investment||$6,000 ($7,000 for taxpayers age 50 and over)||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||Not applicable||No; represents an irrevocable gift to the child||Time/Age Restrictions||Withdraw earnings tax-free only after five years and age 59 1/2||Custodianship terminates when minor reaches age established under state law (generally 18 or 21)||Income Restrictions||Must have taxable compensation; contribution limit phases out for incomes between $204,000 and $214,000 (joint filers) or $129,000 and $144,000 (single)||None||Federal Financial Aid||Not counted as asset; withdrawals of principal and interest counted as financial aid income||Counted as student's asset||Investments||Broad range of securities and certain other investments||As permitted under state laws||Use for Nonqualifying Expenses||Taxable portion of withdrawal prior to age 59 1/2 also subject to 10% early withdrawal penalty||Funds must be used for benefit of the minor|