College Savings Plans

• What is it?
• 529 Plan

  A state-sponsored, tax-deferred college investment account 
• Education Savings Account

  An education savings account set up and managed by a parent or guardian for the benefit of a minor child 
• Custodial Account

  A brokerage account that's managed by a custodian and can be used for college or any other purpose

• Earnings
• 529 Plan

  Tax-deferred 
• Education Savings Account

  Tax-deferred 
• Custodial Account

  For a child under the age of 19 considered a dependent at the end of year (or a full-time college student under the age of 24).

  
  

  Tax Year 2024 – The first $1,300 of a child's unearned income is tax-free the next $1,300 is taxed at the child's rate. Amounts over the $2,600 threshold will be taxed at the parent's tax rate.

  
  

  Tax Year 2025 - The first $1,350 of a child's unearned income is tax-free the next $1,350 is taxed at the child's rate. Amounts over the $2,700 threshold will be taxed at the parent's tax rate.

  
  

  View IRS Form 8814 and IRS Form 8615 for instructions.

• Gift tax contribution limits
• 529 Plan

  Tax Year 2024 – Up to $18,000 ($36,000 per couple) per beneficiary in a single year¹

  
  

  Tax Year 2025 – Up to $19,000 ($38,000 per couple) per beneficiary in a single year¹
• Education Savings Account

  Tax Year 2024 – Up to $18,000 ($36,000 per couple) per beneficiary in a single year¹

  
  

  Tax Year 2025 – Up to $19,000 ($38,000 per couple) per beneficiary in a single year¹
• Custodial Account

  Tax Year 2024 – Up to $18,000 ($36,000 per couple) per beneficiary in a single year¹

  
  

  Tax Year 2025 – Up to $19,000 ($38,000 per couple) per beneficiary in a single year¹

• Withdrawals 
• 529 Plan

  Free of federal income taxes when used for qualified education expenses²
• Education Savings Account

  Free of federal income taxes when used for qualified education expenses²
• Custodial Account

  No tax advantage

• Rollover to a Roth IRA
• 529 Plan

  Rollover to a Roth IRA with a lifetime maximum of $35,000 per account beneficiary
• Education Savings Account

  N/A
• Custodial Account

  N/A

• Contribution limits 
• 529 Plan

  Lifetime limit for each beneficiary that varies by state. Most states set the limit in the $300,000–$500,000 per beneficiary range³
  
• Education Savings Account

  $2,000 per year, subject to adjusted gross income limitations⁴
• Custodial Account

  No limit

• Penalty for nonqualified use 
• 529 Plan

  Earnings are taxed as ordinary income and may be subject to a 10% federal penalty 
• Education Savings Account

  Earnings are taxed as ordinary income and may be subject to a 10% federal penalty 
• Custodial Account

  N/A

• Investment choices
• 529 Plan

  Choose from pre-defined asset allocation portfolios 
• Education Savings Account

  Managed by a parent or guardian 
• Custodial Account

  Managed by a custodian until the account is turned over to the beneficiary (at age 18, 21, or 25, depending on the state of registration)

•  Impact on financial aid
• 529 Plan

  529 plans are counted as assets of the parent or account owner in determining financial aid 
• Education Savings Account

  ESAs are counted as assets of the parent or account owner in determining financial aid 
• Custodial Account

  May significantly impact financial aid

• Age limits
• 529 Plan

  None for beneficiaries 
• Education Savings Account

  Contributions can be made until the beneficiary reaches age 18; funds must be distributed to the beneficiary by age 30
• Custodial Account

  Beneficiary must be under age 18