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529 Saving Plans Coverdell ESA UGMA/UTMA Roth RIAs Series I Bonds
Tax Benefits Earnings:
*FEDERAL: Tax-free
*STATE: Tax-free
Withdrawals:
*FEDERAL: Tax-free
*STATE: Tax-free if one invests in one’s state 529 plan. A few states tax withdrawals if one invests in an out-of-state 529 plan
Earnings:
*FEDERAL: Tax-free
*STATE: Tax-free

Withdrawals:
*FEDERAL: Tax-free
*STATE: Tax-free
Beneficiary under 18:
* First $850 of earning free from federal taxes, next $850 taxed at the Child’s rate
* Earnings above $1,700 are taxed at the parents’ rate
Beneficiary over 18:
* First $850 of earning free from federal taxes, the rest is taxed at child’s rate
Contributions:
* Non-deductible
* withdrawal tax-free

Earnings:
* no early withdrawal penalty 
* Withdrawals subject to account owners ordinary tax rate
Earnings:
*FEDERAL: Tax-free
*STATE: Tax-free
*LOCAL: Tax-free
Is the value of the account excluded from the owner’s taxable estate? Yes Yes No Yes No
Maximum Investment Varies by state. Some states allow new contributions until balance is as high as $310,000 Up to $2,000 per beneficiary per year No Limit $4,000 per year ($4,500 for taxpayers age 50 and over); gradually increasing to $5,000 by 2008 Up to $30,000 per year
Minimum Investment Depends on plan, usually from $25/ month to $50/ month, with some managers requiring automatic contributions from bank a/c or payroll Varies by provider/ investment Varies by provider/ investment Varies by provider/ investment $50 per year
Qualified Higher Education Expenses Savings plans: Tuition, room & board, books, supplies, equipment and expenses for special needs services
Prepaid plans: Tuition & fees only 
Tuition, room & board, books, supplies, & equipment. Elementary & secondary education expenses also qualify  Any Expense Tuition, room & board, books, supplies, & equipment and expenses for special needs services Tuition & fees only
Financial Aid Treatment Parent’s Assets Parent’s Assets Beneficiary’s Assets Not counted as asset; withdrawals of principal and interest counted as financial aid income Parent’s assets if education is for child. Student’s assets if education expenses are for oneself.
Income Restriction None Yes. Parents filing single (filing jointly) with income above $110,000 ($220,000) cannot invest. None Yes, Parents (filing jointly) with income above $160,000 cannot invest. No restriction on purchases. $91,850 – $121,850 for joint returns
Flexibility Earnings on non-qualified withdrawals may be subject to federal income tax at the parents’ rate, plus a 10% federal penalty tax, plus any state and local income taxes where applicable. Earnings on non-qualified withdrawals may be subject to federal income tax at the parents’ rate, plus a 10% federal penalty tax, plus any state and local income taxes where applicable. Money can be withdrawn when becomes of legal age. Money can be used for any purpose. Same as 529 plan Can be redeemed after 6 months. A 3 month earnings penalty applies
Control of Account Account holder, who could be a parent, grandparent, other relative, friend or even a business entity in some states.  Parent or other responsible individual Beneficiary takes hold of account once custodianship ends which is usually 18 or 21 varying by state Account owner Bondholder