Description
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A tax-advantaged way to save for qualified education expenses that's easy to manage and has high contribution limits. Learn more.
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A tax-advantaged way to save for qualified education expenses with flexible investment options. Learn more.
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A way to save for education expenses and take advantage of lower tax rates for children. Learn more.
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Who can contribute/Income limit
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Anyone can contribute. There are no income limits.
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Anyone can contribute. However, the ability to contribute is phased out depending on income. Consult a tax advisor for limits and calculating partial contributions.
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Anyone can contribute. There are no income limits.
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Contribution limit
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$550,000 per beneficiary. Refer to the CollegeAmerica Program Description for additional details.
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$2,000 per year per recipient
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None
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Gift tax considerations
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A contribution to a CollegeAmerica account is considered a gift for federal gift and estate tax purposes. Refer to the CollegeAmerica Program Description for additional details.
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Money contributed to a Coverdell ESA is exempt from the gift tax, as long as the amount contributed, and other gifts made to the same beneficiary, do not exceed the annual gift tax exclusion. Consult a tax advisor for current limits.
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Money contributed to an UGMA/UTMA is exempt from paying a gift tax, up to a certain amount. Consult a tax advisor for current limits.
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Contribution deductibility
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Contributions are deductible for state income tax for Virginia residents.
For residents of other states, please see our In state or out of state? 529 college savings plan tax guide for more information.
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No
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No
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Uses
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Education expenses, such as tuition, room and board and required books and supplies for college and graduate school.
Tuition for elementary or secondary public, private or religious school (up to $10,000).
For information on apprenticeship programs, student loans and more, visit CollegeAmerica qualified education expenses.
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Education expenses, such as tuition, room and board and required books and supplies for kindergarten through high school, college and graduate school.
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Any expense that benefits the child.
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Income tax treatment
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Earnings grow free from federal tax.
Distributions used for qualified education expenses are free from federal tax.
If distributions are used for nonqualified expenses, the earnings are subject to:
States take different approaches to the income tax treatment of distributions. For example, distributions for K–12 expenses may not be exempt from state tax in certain states.
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Earnings grow free from federal tax.
Distributions used for qualified education expenses are free from federal tax.
If distributions are used for nonqualified expenses, the earnings are subject to:
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For specific guidelines regarding income tax treatment for distributions involving children under 19 or full-time students between the ages of 19 and 24, consult your tax advisor.
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Oversight
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The owner maintains control of the assets, decides when distributions will be taken and can change the beneficiary.
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The recipient may assume control at age of majority in their state of residence (18 or 21 years old in most states).
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The beneficiary may assume control at UGMA/UTMA age of majority (18 or 21 years old in most states).
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Investment flexibility
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Assets can be changed among funds twice per calendar year and when a new beneficiary is selected.
Visit CollegeAmerica strategy changes for additional information.
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Assets can be changed among funds, and these exchanges are not considered taxable events.
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Assets can be changed among funds, but each exchange is generally a taxable event.
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Investment options
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Most American Funds, including American Funds College Target Date Series®, in four share classes:
529-A
529-C
529-E
529-F-2
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All American Funds, except tax-exempt and tax-advantaged funds, in three share classes:
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All American Funds, in three share classes:
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Rollovers
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Allowed once every 12 months or when the beneficiary is changed. Learn more.
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Allowed once every 12 months.
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Not applicable.
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Ability to change beneficiaries
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Yes
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Yes
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No
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