Education Savings Account Comparison

Educational Savings Account Features529 Savings Plan*Coverdell Education Savings Account
Income limitationsNoneAdjusted 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 earningsTax-free if used for qualified expensesTax-free if used for qualified expenses
Ability to change beneficiariesYesYes
Control of withdrawalsOwner of accountTransfers to child when child reaches legal age
Investment optionsReady-made portfolios of securitiesWide range of securities
State tax deductible contributionsVaries by stateNo
Qualified use of proceedsAny accredited post-secondary school in the U.S. and some accredited international schoolsPrimary, secondary and/or higher education
Penalties for non-qualified withdrawals10% additional tax on taxable distributions10% additional tax on taxable distributions
Taxation of qualified withdrawalsTax-free at the federal level when used for qualified expensesTax-free at the federal level when used for qualified expenses
Ownership of assets for financial aid purposes (may vary with private institutions)OwnerStudent