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College Savings Vehicles Compared

529 Plans Coverdell ESA U.S. Savings Bonds Custodial Account
Participation restrictions No, though state-run prepaid tuition plans are generally limited to state residents Yes, income limit for contributions and $2,000 maximum annual contribution per child No, but ability to exclude bond proceeds from federal income tax depends on income No
Control of underlying investments No Yes Yes Yes
Federal tax-free withdrawals if funds are used for qualified education expenses Yes (withdrawals may also be exempt from state income tax, depending on state law) Yes (withdrawals may also be exempt from state income tax, depending on state law) Yes, but income limits and other requirements must be met (bond proceeds are generally exempt from state income tax) No
Penalty if funds are not used for qualified education expenses Yes, a 10 percent federal penalty applies to the earnings portion of all nonqualified withdrawals (a state penalty may also apply) Same as 529 plans No, but the bond proceeds won't be exempt from federal income tax No, but withdrawals from the account can only be made for the child's benefit
Federal financial aid treatment (student assets are weighed more heavily than parent assets) Parent asset, if parent or student is account owner, or if 529 plan was funded with custodial account funds Parent asset, if parent is account owner Parent asset, if parent is owner of bonds Student asset
Fees and expenses College savings plan: typically an annual maintenance fee, administration fees, and investment expenses based on a percentage of total account value
Prepaid tuition plan: typically an enrollment fee and various administrative fees
There may be fees associated with opening and/or maintaining an account, depending on financial institution No fees or expenses, except for the possibility of brokerage fees if bonds are purchased through a broker There may be fees associated with opening and/or maintaining an account, depending on financial institution

Note: Investors should consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. More information about 529 plans is available in the issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.

The availability of the tax or other benefits mentioned above may be conditioned on meeting certain requirements. U.S. Savings Bonds are guaranteed as to the payment of principal and interest. The remaining types of college savings vehicles are not guaranteed (except for 529 prepaid tuition plans) and are more risky.

Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFGIS Insurance Agency), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency. Advisory services may only be offered by Investment Adviser Representatives. Click to view the Cetera Investment Services Privacy Policy and other Important Information. Investment Executives are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with, residents of other states will only be made upon compliance with applicable licensing and registration requirements. The information on this website is for U.S. residents only and does not constitute an offer to purchase brokerage services to persons outside of the United States.       These are the views of Forefield and not necessarily of the named representative or Investment Centers of America, Inc. and should not be construed as investment advice. Neither the named representative nor Investment Centers of America, Inc. gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.

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