Education Savings Comparison Chart

  529 Plans Coverdell Education
Savings Account
UTMA Custodial Account
Income Limits

No limits - anyone can contribute

Ability to contribute is phased out for joint filers with an income between $190,000 and $220,000 and for individual filers  with an income between $95,000 and $110,000

No limits

Contribution Limits

Maximum contribution varies by state plan  

Varies between $235,000 -$320,000

Donor may make a gift annually up to $12,000 per child (single filers) or $24,000 per child (joint filers) tax-free2 

Donor may initially contribute up to five years worth of contributions, allowing gift-tax free initial deposits of $60,000 per beneficiary ($12,000 gift tax-free maximum per year; five years per donor)3

$2,000 per year per beneficiary (must meet income limits)1

No limits 

 

You may make an annual gift up to $12,000 per child (single filers) or $24,000 per child (joint filers) tax-free2 

Uses Qualified education expenses such as tuition, books, room and board and supplies for college and graduate school Qualified education expenses including Tuition, books, room and board for kindergarten through high school, college and graduate school 1 Any use that benefits the child
Oversight Owner maintains control of assets, decides when withdrawals will be made and can change beneficiaries Beneficiary may assume control at age of majority (18 or 21 in most states) Beneficiary may assume control at age of majority (18 or 21 in most states)
Ability to change beneficiaries

Yes

Yes

No

Tax Considerations
  • Contributions are not
    tax-deductible
  • Earnings grow federal
    tax-deferred
  • Withdrawals for qualified expenses are federal tax-free4
  • Some states offer tax incentives5
  • Earnings grow federal
    tax-deferred
  • Withdrawals for qualified expenses are federal tax-free4
  • The first $850 of earnings each year are tax-free for children under 18 
  • Withdrawals are subject to
    federal tax

Interested in learning more?

Disclosures:

  1. Effective through 2010 unless extended by Congress
  2. Higher contributions will be subject to federal gift tax regulations.
  3. In the event the donor does not survive the five-year period, a pro-rated amount will revert to the donor's taxable estate.
  4. Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
  5. Some states have also elected to offer incentives for investing in any state's 529 Plan. Varies per state.
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