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529 Plans Education Savings Accounts UGMA/UTMA Parents' Assets
How much can you invest?
Varies by State but usually over $200,000. $2,000 maximum annual contribution per child. Unlimited contributions. Unlimited contributions.
Tax treatment
Earnings are federal tax-free if used for the child's qualified higher education expenses. Earnings are tax-free if used for the child's qualified education expenses. A portion of earnings are tax-free. Another portion may be taxable at the child's rate, which is usually lower than an adult's. Earnings are generally taxable at the adult's rate.
Restrictions on using the money
Withdrawals must be used for qualified higher-education expenses or earnings are taxed and may be subject to a 10% additional federal tax. Withdrawals must be used for qualified education expenses or earnings are taxed and may be subject to a 10% additional federal tax. Withdrawals can pay for higher education, but also may be made for non-educational needs of the child. Withdrawals can be made for any purpose.
Who controls the account?
Responsible individual maintains control of the account until all assets are distributed. Child may assume control of the account at age 18. Child may assume control of the account once the custodianship terminates. Adult maintains control of the account.
Impact on financial aid
The account is considered an asset of the responsible individual for financial aid; therefore, the student may qualify for more financial aid. The account is considered an asset of the responsible individual for financial aid; therefore, the student may qualify for more financial aid. The account is considered an asset of the child for financial aid. A child's assets carry more weight in the calculation of financial need; therefore the student may qualify for less financial aid. A parent's assets carry less weight in the calculation of financial need; therefore, the student may qualify for more financial aid with this option.
  • Not FDIC Insured
  • No Bank Guarantee
  • May Lose Value

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Next Steps

Give the gift that lasts a lifetime – start investing in your child's education today!

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