Compare savings options

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

YEAR 2025 RULES	Roth IRA
Federal Income Tax	Non-deductible contributions; withdrawn earnings excluded from income after age 59 1/2 – and five years; 10% penalty on early withdrawals waived if used for qualified higher education expenses
Federal Gift Tax Treatment	No gift involved
Federal Estate Tax Treatment	Value included in the owner's gross estate
Maximum Investment	$7,000 ($8,000 for taxpayers age 50 and over)
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.
Able to Change Beneficiary	Not applicable
Time/Age Restrictions	Withdraw earnings tax-free only after five years and age 59 1/2
Income Restrictions	Must have taxable compensation; contribution limit phases out for incomes between $236,000 and $246,000 (joint filers) or $150,000 and $165,000 (single)
Federal Financial Aid	Not counted as asset; withdrawals of principal and interest counted as financial aid income
Investments	Broad range of securities and certain other investments
Use for Nonqualifying Expenses	Taxable portion of withdrawal prior to age 59 1/2 also subject to 10% early withdrawal penalty

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