No matter your aspiration, circumstance, or budget, 529 College Savings Plans can offer distinct advantages:

  • You control the account and can change the beneficiary at any time, subject to IRS regulations.
  • Any earnings are tax-deferred.
  • Distributions are exempt from federal income tax if used for qualified education expenses. Please note that the availability of tax or other benefits may be conditioned on meeting certain requirements such as residency, purpose for or timing of distributions, or other factors as applicable.
  • There are no income restrictions or limits to investing in a 529 plan.

529 plans vary from state to state, and each has somewhat different costs, investment options, and tax incentives. When choosing the plan that works for your goal, compare the features of your state's 529 plan to others to weigh the plan benefits.

  529 Savings Plan UGMA/UTMA Account Taxable Account
Where can I use my savings? Can be used at almost all colleges or universities in the U.S. (Some international schools qualify as well.) Until the child reaches the age of majority, the custodian must use the money for the child. After that, the money belongs to the child. No restrictions.
How are the withdrawals and earnings taxed?* No federal taxes for withdrawals used to pay qualified educational expenses. Until withdrawal, your account has tax-deferred growth potential. Above a given level, earnings will be taxed at either the child's or the parent's rate. Taxes apply. Earnings may be taxed as capital gains or ordinary income.
What are the contribution limits? Often $300,000 or more, but depends on the plan. No limit. No limit.
Who controls the money? The account holder. The money belongs to the child, although it is controlled by a custodian until the child reaches the age of majority. The account owner.
Does my income level affect my ability to contribute? No. No. No.
Can I change beneficiaries? Yes. You can transfer assets to another member of the beneficiary's family. No. Not applicable.
*This chart only addresses federal tax advantages because state tax treatment may vary. Earnings on a distribution that is not used for qualified expenses may be subject to income taxes and a 10% federal penalty.