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 2024 RULES | 529 Plan | Qualifying U.S. Savings Bonds |
|---|---|---|
| Federal Income Tax | Non-deductible contributions; withdrawn earnings excluded from income to extent of qualified higher education expenses | Tax-deferred for federal; tax-free for state; certain post-1989 Series EE and I bonds may be redeemed federal tax-free for qualified higher education expenses | Federal Gift Tax Treatment | Contributions treated as completed gifts; apply $18,000 annual exclusion, or up to $90,000 with 5-year election | No gift as qualifying bonds must be owned by the parent | Federal Estate Tax Treatment | Value removed from donor's gross estate; partial inclusion for death during a 5-year election period | Value included in bond owner's gross estate | Maximum Investment | Established by the program; many in excess of $400,000 per beneficiary | $10,000 face value per year, per owner, per type of bond | 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. Up to $35,000 can be transferred to beneficiary's Roth IRA in certain circumstances. | Tuition and fees | Able to Change Beneficiary | Yes, to another member of the beneficiary's family | Not applicable | Time/Age Restrictions | None unless imposed by the program | Bond purchaser must be at least 24 years old at time of bond issuance | Income Restrictions | None | Interest exclusion phases out for incomes between $145,200 and $175,200 (joint filers) or $96,800 and $111,800 (single filers) | Federal Financial Aid | Counted as asset of parent if owner is parent or dependent student | Counted as asset of bond owner | Investments | Menu of investment strategies as developed by the program | Interest-earning bond backed by full faith and credit of U.S. government | Use for Nonqualifying Expenses | Withdrawn earnings subject to federal tax and 10% penalty | No penalty; interest on redeemed bonds included in federal income |
