Education Saving Plans Comparisons

Feature	529 Savings Plan	Prepaid College Plan	UGMA/UTMA Custodial Account	Brokerage Account (Parent-Owned)
Primary Purpose	Save and invest for education expenses	Lock in future tuition costs at today’s rates	General savings/investing for child’s benefit	Flexible investing for any purpose
Who Controls the Account?	Parent/Account Owner	Parent/Account Owner	Parent until child reaches age of majority	Parent
Who Owns the Assets?	Parent	Parent	Child	Parent
Investment Options	Limited menu of investment choices	Very limited; often plan-based	Broad investment flexibility	Broad investment flexibility
Tax Treatment of Growth	Tax-deferred	Tax-deferred	Taxable annually (subject to kiddie tax rules)	Taxable annually
Tax Treatment of Withdrawals	Tax-free if used for qualified education expenses	Tax-free for qualified tuition expenses	Earnings may be taxable	Capital gains/dividends may be taxable
Qualified Uses	College, some K–12 expenses, apprenticeships, student loans	Primarily tuition at participating institutions	Any expense benefiting the child	Any purpose
Can Funds Be Used for Non-Education?	Yes, but earnings may be taxable and subject to penalties	Limited; restrictions may apply	Yes	Yes
Can Beneficiary Be Changed?	Yes	Usually yes (subject to plan rules)	No — assets belong to child	Not applicable
Impact on Financial Aid	Lower impact (parent asset)	Lower impact (parent asset)	Higher impact (student asset)	Lower impact (parent asset)
Contribution Limits	High lifetime limits by state	Plan limits vary	Subject to gift tax rules	No contribution limits
Flexibility	Moderate–High	Low–Moderate	High until ownership transfers	Very High
Biggest Advantage	Strong tax benefits for education	Protection from rising tuition costs	Maximum flexibility for child’s future needs	Full control and flexibility
Biggest Drawback	Must follow qualified education rules for best tax treatment	Less flexibility if plans change	Child gains control at adulthood	No education-specific tax benefits
Best For…	Families committed to education savings	Families confident about in-state or participating schools	Families wanting flexibility beyond education	Families prioritizing control and broad financial goals

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