Qualified Tuition Program / 529 Plan

  • Higher investment limits than other education savings programs
  • Both tax-deferred earnings growth and federal income tax-free withdrawals if used to pay for qualified education expenses
  • Qualified expenses include tuition, books, fees and certain living expenses at accredited postsecondary institutions
  • The availability of tax or other benefits may be conditioned on meeting certain requirements. Non-qualified withdrawals are subject to federal and state income taxes and a 10% penalty

Coverdell Education Savings Account (CESA)

  • Contributions to a CESA and a 529 Plan allowed in the same year for the same student
  • Maximum annual contribution of $2,000 per student and may be limited depending on your income
  • Contributions to a CESA are not tax deductible
  • Tax-free withdrawals if used for qualified higher education expenses, in addition to qualified elementary and secondary school expenses
  • Distributions are tax-free, provided the funds are used for qualified expenses, such as room, board and tuition. Otherwise, the earnings could be taxed and subject to a 10% penalty.
  • Request CESA Investing Kit
  • Download CESA Application PDF

Uniform Gifts/Transfers to Minors Act Accounts

The Uniform Transfers to Minors Act (UTMA) allows adults to act as custodians and open accounts for minors.

All states, except South Carolina and Vermont, have adopted the UTMA. Those two states use the Uniform Gifts to Minors Act (UGMA). Details of the account types are similar:

  • Taxes on assets invested in a minor's name may be less than if they were invested in an adult's name because of the usual differences in tax brackets.
  • The account is transferred to the child upon reaching the age specified by the act, which in many states is 18 or 21.
  • At the point of transfer, the child controls the account. Consider whether this change of control meets your goals for the investment.
  • Because a student's assets are considered when determining financial aid eligibility, this transfer raises the possibility of losing future financial aid.
  • Request Investing Kit
  • Download Application PDF
  • Open Account

Traditional IRA or Roth IRA

IRAs are meant to help you retire comfortably. Although penalty-free withdrawals from IRAs generally are permitted for qualified higher education expenses, you may owe income taxes on any earnings and deductible contributions. And remember, the use of IRA investments for college expenses may affect your long term retirement goals.

Please call an Investment Consultant at 1-800-345-2021 to explore whether an IRA is the best option for your college investment needs.

Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.

IRA investment earnings are not taxed. Depending on the type of IRA and certain other factors, these earnings, as well as the original contributions, may be taxed at your ordinary income tax rate upon withdrawal. A 10% penalty may be imposed for early withdrawal before age 59½.


Before investing, consider the investment objectives, risks, and charges and expenses associated with investing in 529 Plans. More information about 529 Plans is available in the issuer's official statement, and it should be read carefully before investing.

Past performance is no guarantee of future results. Investment returns will fluctuate and it is possible to lose money.