| |
College Savings Plan |
Prepaid Tuition Plan |
ESA |
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 $200,000 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. |
$850 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:
$65,600 - 80,600
Joint Filers:
$98,400 - 128,400 |
| Penalties for Non-Qualified Withdrawals |
Earnings are taxed as ordinary income and may be subject to 10% penalty. |
Earnings are taxed as ordinary income and may be subject to 10% penalty. |
Withdrawals that exceed the beneficiary's education expenses for the year may be taxable. |
None |
Interest earned is taxed as income. |
