Compare savings options

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

Federal Income TaxNon-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expensesEarnings and gains taxed to minor; first $1,100 of unearned income is tax exempt;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 TreatmentContributions treated as completed gifts; apply $15,000 annual exclusion, or up to $75,000 with 5-year electionTransfers treated as completed gift; apply $15,000 annual gift exclusion
Federal Estate Tax TreatmentValue removed from donor's gross estate; partial inclusion for death during a 5-year election periodValue removed from donor's gross estate unless donor remains as custodian
Maximum InvestmentEstablished by the program; many in excess of $400,000 per beneficiaryNo limit
Qualified ExpensesTuition, fees, books, computers and related equipment, supplies, special needs and some room and board at eligible colleges and universities; costs of apprenticeship programs; up to $10,000 per year in tuition expenses at private, public and religious K-12 schools; Up to $10,000 in student loan payments for the beneficiary and each of the beneficiary's siblings.No restrictions
Able to Change BeneficiaryYes, to another member of the beneficiary's familyNo; represents an irrevocable gift to the child
Time/Age RestrictionsNone unless imposed by the programCustodianship terminates when minor reaches age established under state law (generally 18 or 21)
Income RestrictionsNoneNone
Federal Financial AidCounted as asset of parent if owner is parent or dependent studentCounted as student's asset
InvestmentsMenu of investment strategies as developed by the programAs permitted under state laws
Use for Nonqualifying ExpensesWithdrawn earnings subject to federal tax and 10% penaltyFunds must be used for benefit of the minor

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