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Education Savings Comparison Table

Feature 529 College Savings Plan Custodial Accounts (UGMA/UTMA) Coverdell ESA Parents' Savings Accounts
Qualified Expenses Higher education (tuition, room/board, books). Up to $10k/year for K–12 tuition. Up to $10k lifetime for student loan repayment. No restrictions once the minor reaches age of majority. K–12 and higher education. Must be used by age 30. None.
Max Contribution Annual: No federal limit (gift tax rules apply). Lifetime: Many plans allow $500,000+. No limit. $2,000 per year per beneficiary. No limit.
Who Controls Assets Account Owner (parent/grandparent). Custodian until age 18–21, then minor gains full control. Donor/Custodian. Parent/Owner.
AGI Limits None. None. Phase-out: $95k–$110k (Single) / $190k–$220k (Joint). None.
Taxation of Earnings Federal tax-free for qualified expenses. No tax-deferral. Taxed at child’s rate; Kiddie Tax applies above ~$2,600. Federal tax-free for qualified expenses. Taxed annually at federal and state levels.
Gift Tax Limit (2026) $19,000 individual / $38,000 joint. $19,000 individual / $38,000 joint. Counts toward $19,000 annual exclusion. N/A.
5-Year “Superfunding” Up to $95,000 individual / $190,000 joint. N/A. N/A. N/A.
Non-Qualified Withdrawal Earnings taxed + 10% penalty. N/A (assets belong to child). Earnings taxed + 10% penalty. N/A.

Key Updates for 2026

  • 529 to Roth IRA Rollover: Up to $35,000 lifetime may be rolled into the beneficiary’s Roth IRA if the 529 has been open at least 15 years.
  • Kiddie Tax Threshold: First ~$1,300 tax-free, next ~$1,300 taxed at child’s rate, remainder taxed at the parent’s marginal rate.
  • Estate Exclusion: 529 assets are removed from the donor’s estate even though the donor retains control.