Features In 2008 tax year

529 College Savings Plans

UGMA/UTMA Accounts(Uniform Gift and Uniform Transfer to Minor Accounts)

Coverdell Education Savings Account

Roth Individual Retirement Account

Qualifying U.S. Savings Bonds

Funds can be Used At

 *Any eligible educational institution in the US and including some outside US

When child reaches age of majority, child controls use of funds (doesn’t need to use them for higher education)

Any eligible educational institution in the US and including some outside US May also be used for K-12 education

Any eligible educational institution

Any eligible educational institution in the US and including some outside US

Qualified Distributions are Federal Tax-free

Yes, to the extent of higher education expenses for the year

Under 18 – the first $850 of un-earned income is exempt from federal income tax; second $850 is taxed at child’s rate; over $1700 taxed at parent’s rate

Same as 529 + qualified K-12 educational expenses also included

Qualified higher education expenses are federal tax free and without penalty

Tax-deferred federally; tax-free for state purposes

Maximum Contribution

Varies but majority of plans permit total contri-butions in excess of $250,000 per beneficiary

No Limit

$2000 per beneficiary annual account contribution limit

$5000 for filers age 50 or older, per account. 

$30,000 face value per year, per person, per bond

Beneficiary Can be Changed

Yes (within the same family)

No

Yes (within the same family)

No

Will require re-issuance of bond

PDF 4000

Investment Choices

Owner choice amongst securities and other invest-ments

Range of investments as permitted by state law

Owner choice amongst securities and other invest-ments

Owner choice amongst securities and other invest-ments

Government-backed, interest-earning savings bonds

Expenses Covered

*Qualified postsecondary educational expenses

No restrictions on types of expenses

Same as 529 with the addition of K-12 expense categories

Same as 529 plan

Tuition and mandatory fees for post-secondary educ.

Federal Financial Aid Reportability

Parental (Owner) Asset

Student (Beneficiary) Asset

Can be Parental or Student Asset

Not reportable as asset -withdrawn principal and interest reported as income

In parent’s name-Parental Asset; in child’s name-child’s asset

Penalties for Non-Qualified Withdrawals

Subject to federal tax and 10% penalty

Must be used for the benefit of the minor

Subject to federal tax and 10% penalty

Taxable income taken prior to 59 ½ subject to 10% penalty

Interest included in federal income; no penalty