COLLEGE SAVINGS CENTER

College Savings Plans Comparison Chart

  Coverdell ESA 529: Prepaid Tuition 529: Savings Plan
Highlights An investment account available to contributors who earn less than $110K (for single filers) and $220K (for joint filers) Contributions today are guaranteed to cover tuition costs in the future. A state-sponsored investment account for the benefit of anyone -- your child, your cousin, your neighbor, yourself
Offered by� Brokerages, mutual fund companies, banks States States (usually with help from a financial services companies)
Contribution limit $2,000 per student per year Depends on plan and age of student Depends on plan -- varies from $100,000 to $305,000
Tax treatment of withdrawals Tax-free if used for qualified expenses Tax-free if used for qualified expenses Tax-free if used for qualified expenses until 2010 (distributions will count as income to the student in 2011 and beyond unless Congress extends the current law)
Qualified expenses Tuition, room, board, fees, supplies, and special needs related to the attendance of a qualified elementary, secondary, or post-secondary institution Tuition at a college within the plan (some plans will also cover room and board) Tuition, fees, room, and board at qualified higher-education institutions
Tax-deductibility None Some states allow contributions to be partially or completely deductible. Some states allow contributions to be partially or completely deductible.
Investment flexibility Assets can be invested in stocks, bonds, mutual funds, and cash equivalents. Investments can be bought and sold as often as desired. Plan administrators invest all assets. Assets are professionally managed. Depending on the plan, participants can choose from two to almost 30 mutual fund-type investments. Investment choice may be changed once every 12 months.
Ability to transfer account Account may be transferred to other brokerage or mutual fund, or to a 529 plan, subject to fees and penalties. Depends on plan May transfer to another 529 plan once every 12 months
Interaction with Hope and Lifetime Learning Credits Credits can be claimed in the same year as tax-free withdrawal provided that the distribution is not used for the same expenses for which a credit is claimed. Credits can be claimed in the same year as tax-free withdrawal provided that the distribution is not used for the same expenses for which a credit is claimed. Credits can be claimed in the same year as tax-free withdrawal provided that the distribution is not used for the same expenses for which a credit is claimed.
Effect on financial aid Considered to be an asset of the student, which means a large portion of the assets will be considered in the financial aid calculation Considered to be the student's resource and thus reduces financial aid dollar-for-dollar Assets are considered to be property of the account owner, which -- unless the owner is also the beneficiary -- means only a small portion of the assets will be considered in the finanical aid calculation
Control of the account In most states, account assets become property of the student at age 18. In most states, control of account will always remain with contributor. In most states, control of account will always remain with contributor.
Must use funds by� Age 30 Varies by plan Varies by plan
Assignability to other relatives Immediate family, including cousins, step-relatives, and in-laws Immediate family, including cousins, step-relatives, and in-laws Immediate family, including cousins, step-relatives, and in-laws
Penalty for non-qualified withdrawals Earnings are taxed as ordinary income to contributor, plus a 10% penalty Earnings are taxed as ordinary income to account owner, plus a 10% penalty Earnings are taxed as ordinary income to account owner, plus a 10% penalty
Contribution deadline Tax-filing deadline for the year of the contribution Depends on the plan Depends on the plan
  Coverdell ESA 529: Prepaid Tuition 529: Savings Plan
End« Previous