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529 Savings Plans
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529 Prepaid Tuition Plans
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Coverdell Education Savings Accounts
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Custodial Accounts
UTGA/UTMA |
Taxable
Investment Account |
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Investment Options
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Vary by plan, but usually include age-based and static mutual funds options.
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Rate of return tied to increases in tuition rates at in-state colleges.
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Stock, Bonds, Mutual Funds
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Stock, Bonds, Mutual Funds
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Stock, Bonds, Mutual Funds
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Ownership
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Owner
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Owner
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Guardian
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Custodian until the minor turns the age of majority
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Owner
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Flexibility
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College Expenses
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College tuition and fees
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Educational expenses at any academic level
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For the benefit of child
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Unlimited
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Contribution Limit
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Vary by State
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Vary by State
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$2,000 per year, per beneficiary
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$13,000 annually or $26,000 per couple
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None
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Income (AGI) Limits
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None
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None
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Joint Filers $190,000 to $220,000
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None
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None
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Taxation of Earnings / Distributions
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Earnings are tax deferred, if used for qualified expenses distributions are tax free
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Earnings are tax deferred, if used for qualified expenses distributions are tax free
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Earnings grow tax-deferred and if used for qualified expenses, distributions are tax free
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Earnings are taxed at the child’s income tax rate
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Earnings are taxed at the owners income tax rate
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Change of Beneficiary
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Can transfer to a qualified member of family
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Vary by state, but usually can transfer to a qualified member of family
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Can transfer to a qualified member of family
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Not Permitted
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Yes, but may be subject to Gift Tax
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Generally speaking, for 2009 individuals are allowed to gift $13,000 ($26,000 for married couples) per year with out incurring Gift Taxes. A special provisions does allow a donor to contribute 5 years worth of annual gifts ($65,000) at one time to a 529 plan (Contact MTR Financial Services, LLC for more details)
The definition of qualified expenses for 529 Saving Plan account distributions may vary from state to state, but usually include tuition, fees, books, room, and board.
The definition of qualified expenses for Prepaid Tuition Plan account distributions will vary from state to state, but normally is limited to include tuition and fees only. Room and board may be included as well; check with plan administrator for verification.
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