College Savings

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Compare your college savings options

The chart below highlights the features of two of the most popular ways to save for college

Learn about their tax advantages, contribution maximums, impact on federal aid, potential penalties, and more.

529 College Savings Plan


What you can do

Invest tax-free for college.*

Invest on behalf of a minor for any purpose.

Ability to change beneficiaries



Controlled by

Person establishing the account.

Custodian, until the child is of age.


Qualified college expenses.

Any expense that benefits the child.

Impact on federal financial aid eligibility

Considered asset of parent or other account owner.†

Considered asset of child.

Contributions state tax-deductible

Varies by state.


State tax on earnings

Varies by state.

Depends on child's age.

Federal tax on earnings

No, if used for qualified expenses.*

Depends on child's age.

Penalties for nonqualified withdrawals

Federal income tax plus 10% penalty tax; state penalties vary.


Contribution maximum per beneficiary

$200,000 to $300,000 or more, depending on state.


Investment options

Portfolios consisting of a variety of investments, including age-based options that adjust automatically.

UGMA: mutual funds and securities.
UTMA: mutual funds, securities, real estate, royalties, patents, and paintings.

Estate planning impact

Contributions are removed from estate.††

Contributions are immediately removed from estate.

Income limitations




  • All investments are subject to risk.
  • Investments in bonds are subject to interest rate, credit, and inflation risk.

* Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

† Distributions for qualified educational expenses are not counted as parent or student income in the determination of federal financial aid eligibility. Clients should consult their advisors about the financial aid treatment of student-owned and UGMA/UTMA 529 accounts.

†† If you choose to take advantage of the accelerated gift tax benefit and you die within five years, a prorated portion of the contribution will be subject to estate tax. If you contribute more than $14,000 in a particular year, you must file IRS Form 709 by April 15 of the following year. For more information, consult your tax advisor or estate planning attorney.

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