| Custodial account (UGMA/UTMA) | 529 plan | |
|---|---|---|
| Exempt from federal income tax | Non-taxable income is limited to the first $1,350 of earnings in 2025. |
Qualified expenses for college, up to $10,000 for primary or secondary school tuition1 |
| Investment options | Many | Limited |
| Income eligibility limit for contributors | None | None |
| Contribution limit | None2 | Lifetime maximum (varies by state, generally $235,000-$550,000) |
| Flexibility with proceeds | Yes, as long as proceeds are used for the benefit of the minor. Subject to kiddie tax. | No. Primarily for education. If used outside of permitted educational expenses, proceeds may be subject to additional taxes and penalties. |
Disclosure Title
About Table 1
Disclosure
1Check with the 529 plan date rules to see if this option is permitted. Not all states follow the new federal tax rules.
2Amounts over $19,000 per person ($38,000 for a married couple) in 2025 may be subject to the gift tax.
Source: irs.gov
For illustrative purposes only. Past performance does not guarantee future results.