COMPARE THE ALTERNATIVES.
You'll see there's no comparison.
Compare 529 plans to the alternatives like Coverdell Education Savings Accounts, U.S. Savings Bonds, or traditional mutual fund investments and you’ll quickly see why 529 plans are one of the most popular ways to save for college.
Only 529 plans offer all of these unique advantages:
- State and federal tax advantages
- Diversity of investment options
- High contribution limits
- No age or income restrictions
CollegeAdvantage 529 Savings Plan
Coverdell Education Savings Account
Qualifying U.S. Savings Bonds
Traditional Mutual Fund Investments
Federal Income Tax
Federal and Ohio income tax-free when used for qualified higher education expenses.1
Federal income tax-free when used for qualified higher education expenses, and qualified K-12 expenses before 2013 also excluded.
Tax-deferred for federal; tax-free for state. Certain post-1989 EE and I bonds may be redeemed federal tax-free for qualified higher education expenses.
Earnings and gains taxed in year realized. Special lower tax rates for certain capital gains and qualifying dividends.
Federal Gift-Tax Treatment
Contributions treated as completed gift. Use $13,000 annual exclusion, or up to $65,000 with 5-year election.
Same as 529 plan but 5-year election only available under special circumstances.
No gift, as bonds are owned by the parent, or the gift occurred when the bond was purchased in the child's name.
No gift involved. Direct payments of tuition are excluded from gifts.
Federal Estate-Tax Treatment
Value removed from donor's gross estate; exception exists for death during the 5-year election period.2
Value removed from donor's gross estate.
Value is included in bondholder's gross estate.
Value is included in the owner's gross estate.
Maximum Investment
$371,000 per beneficiary.
$2,000 per beneficiary per year combined from all sources.
$5,000 face value per year, per owner, per type of bond.
Qualified Expense
Tuition, fees, room and board, books, supplies, equipment, and special needs.
Same as 529 plan plus additional categories of K-12 expenses.
Time/Age Restrictions
Contributions before beneficiary reaches age 18. Use of account by age 30.
Bond purchaser must be at least 24 years old at time of bond issue.
Income Restrictions
Ability to contribute phases out for incomes between $190,000 and $220,000 (joint filers).
Interest exclusion phases out for incomes between $106,650 and $136,650 (joint filers).
Federal Financial Aid
Counted as an asset of the account owner (typically the parent). Not counted as an asset of the student.
Counted as an asset of the parent or other account owner. Not counted as a student asset.
Counted as asset of bondholder.
Counted as asset of the owner.
Investment Choices
Broad range of investment options, including agebased, stock, bond, CD and savings account options.
Broad range of securities and certain other investments.
Interest-earning bond backed by full faith and credit of U.S. government.
Wide range of mutual funds.
Tax Withdrawals Not Used for Higher Educational Expenses
Earnings subject to federal and Ohio income tax when withdrawn, plus 10% additional federal tax.
Earnings subject to federal and Ohio income tax when withdrawn, plus 10% additional federal tax.
No penality; interest on redeemed bonds is included in federal income, excluded from state income.
Normal taxation of investment income. No penality.
1Earnings on withdrawals not used for qualified higher education expenses may be subject to federal income tax and a 10% federal tax penalty. Qualified higher education expenses are defined by the Internal Revenue Code. As with all tax-advantaged investment decisions, consult with your tax advisor.
2If an account owner elects to treat a contribution as having been made over a 5-year period and dies before the end of the 5-year period, the portion of the contribution allocable to the remaining years in the 5-year period (not including the year in which the account owner died) would be included in computing the account owner's gross estate for federal estate-tax purposes. Account owners may be required to file a gift-tax return in each of the 5 years. In addition, account owners may wish to consult their tax or estate-planning counsel to ensure that they obtain the tax consequences they desire.