College Savings Comparison Chart
| 529 College Savings Plan |
529 Prepaid Tuition Plan |
Educational Savings Account |
Custodial Accounts |
Savings Bonds |
|
|---|---|---|---|---|---|
| Ownership/ Control |
Contributor | Contributor | Contributor | Custodian until child reaches age of majority | Contributor |
| Investment Choices |
Typically, plans provide several investment options. | None | No restrictions | No restrictions | Savings bonds |
| Age Limits |
None | Plan may set age or grade limits. | Except for special needs children, no contributions can be made after a child reaches age 18, and withdrawals must be made before beneficiary reaches age 30. | Minor child | Owner must be at least 24 before the bond's issue date (not purchase date). |
| Expenses Covered Besides Tuition and Fees |
Qualified education expenses for post-secondary education | With a few exceptions, only tuition and mandatory fees for post-secondary education are covered. | Qualified elementary and secondary education expenses or qualified higher education expenses | No restrictions on types of expenses | Tuition and mandatory fees for post-secondary education and contributions to 529s and ESAs |
| Contribution Limit |
Varies from plan to plan. Majority of plans permit total contributions in excess of $250,000 per beneficiary. | Fixed by terms of contract you purchase | Contributor: $2,000 per beneficiary per year Beneficiary: $2,000, does not matter how many ESAs are set up. |
No limit | No limit |
| Federal Tax Advantages |
Earnings grow tax-deferred and are tax-free if used for qualified education expenses. | Earnings grow tax-deferred and are tax-free if used for qualified education expenses. | Earnings grow tax-deferred and are tax-free if used for qualified education expenses. | $1,050 in earnings are tax-free. | Interest grows tax-deferred and is tax-free if used for qualified education expenses. |
| State Tax Advantages |
Varies from state to state, but some states provide tax deduction for contributions, tax-free earnings growth and tax-free withdrawals for qualified education expenses. | Varies from state to state, but some states provide tax deduction for contributions, tax-free earnings growth and tax-free withdrawals for qualified education expenses. | None | None | Interest is usually tax-exempt from state and local taxes. |
| Income Phase-Out |
None | None | Single filers: $95,000 – $110,000 Joint filers: $190,000 – $220,000 |
None | Single Filers: $77,201– $91,999 Joint Filers: $115,751 – $145,749 |
| Penalties for Non-Qualified Withdrawals |
Earnings are taxed as ordinary income and may be subject to 10-percent penalty. | Earnings are taxed as ordinary income and may be subject to 10-percent penalty. | Withdrawals that exceed the beneficiary's education expenses for the year may be taxable. | None | Interest earned is taxed as income. |