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 2025 RULES | Roth IRA |
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Federal Income Tax | Non-deductible contributions; withdrawn earnings excluded from income after age 59 1/2 – and five years; 10% penalty on early withdrawals waived if used for qualified higher education expenses |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 |