Education Savings Account Comparison

Educational Savings Account Features 529 Savings Plan * Coverdell Education Savings Account
Income limitations None Adjusted Gross Income limits apply
Maximum yearly contribution per beneficiary $60,000 in the first year of a five-year period without exceeding federal gift tax exclusion $2,000
Account earnings Tax-free if used for qualified expenses Tax-free if used for qualified expenses
Ability to change beneficiaries Yes Yes
Control of withdrawals Owner of account Transfers to child when child reaches legal age
Investment options Ready-made portfolios of securities Wide range of securities
State tax deductible contributions Varies by state No
Qualified use of proceeds Any accredited post-secondary school in the U.S. and some accredited international schools Primary, secondary and/or higher education
Penalties for non-qualified withdrawals 10% additional tax on taxable distributions 10% additional tax on taxable distributions
Taxation of qualified withdrawals Tax-free at the federal level when used for qualified expenses Tax-free at the federal level when used for qualified expenses
Ownership of assets for financial aid purposes (may vary with private institutions) Owner Student