529 College Savings Plan

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For more information, contact the MEMBERS Financial Services Representative serving CUNA Mutual Group for a no cost, no obligation consultation.

How 529 College Savings Plans Compare to Other Tax-Favored Options

How do the 529 College Savings Plans stack up against other tax-favored ways of saving for a higher education? The chart below is an easy way to help you answer that question. It compares the 529 College Savings Plans to these other higher education savings options that may be available to you today:

529 Prepaid Tuition Plans
Education Savings Accounts (formerly called Education IRAs)
U.S. Savings Bonds for Education
Custodial UGMA or UTMA Accounts.

The chart gives you a chance to quickly compare the advantages and disadvantages of the 529 College Savings Plans to these four other programs. You can also look at how all these higher education savings programs�including the 529 College Savings Plans�compare to each other in terms of: 1) income limitations, 2) contribution limitations, 3) tax treatment, and 4) who controls the account.

	529 COLLEGE SAVINGS PLANS	529 PREPAID TUITION PLANS	EDUCATION SAVINGS ACCOUNTS (formerly called Education IRAs)	U.S. SAVINGS BONDS FOR EDUCATION	CUSTODIAL UGMA OR UTMA ACCOUNTS
INCOME ELIGIBILITY LIMITS	None	None	Single taxpayers with income *** under $95,000 to $110,000. married joint filers with income under $190,000 to $220,000. If your income exceeds the limits, you can gift money to a child to make contributions.	Tax break phases out for single taxpayers with income *** over $58,500 and for married joint filers with income over $87,750.	None
CONTRIBUTION LIMITS	Varies by plan, typically between $200,000 to $250,000 per student.	Varies by plan: Maximum is the amount necessary to prepay tuition.	Up to $2,000 a year per child under age 18 (with an exception for special needs beneficiaries).	Series EE Bonds: Maximum of $30,000 face amount in your name per year. Series I Bonds: Maximum of $30,000 in your name per year.	None
TAX TREATMENT *	Qualified withdrawals of earnings are free from federal income taxes. ** Some states offer tax breaks for residents.	Qualified withdrawals of earnings are free from federal income taxes. ** Some states offer tax breaks for residents.	Withdrawals for qualified education expenses are free from federal income tax. **	Interest may be exempt from federal income tax if you cash in the bonds for qualified higher education expenses and meet the other requirements.	For children under age 14, unearned income over $1,500 is taxed at the parent's marginal tax rate.
CONTROL OF THE ACCOUNT	Whoever is the account owner, generally the parent or grandparent.	Whoever is the account owner, generally the parent or grandparent.	Child owns the account, but the parent generally controls the assets for the life of the account.	The bond owner.	At the age specified by state law, generally 18 or 21, any assets remaining in the account pass to the control of the child.
ADVANTAGES	You choose how to invest your savings from the options offered. High maximum contribution limits.	Allows you to lock the cost of tuition at current prices. Plan benefits may be guaranteed by the state.	You can use the savings for qualified elementary, secondary, and higher education expenses. You can invest in most types of investments.	Guaranteed minimum interest rate. The U.S. Goverment guarantees interest payments and principal.	You can invest in most types of investments. No income eligibility or contribution limits.
DISADVANTAGES	You can only change investment options within the same plan once a year. Nonqualified withdrawals are subject to income tax and a 10% tax penalty.	Savings may not cover the cost of tuition at an out-of-state university or private college. Nonqualified withdrawals are subject to income tax and a 10% tax penalty.	Low annual contribution limits. Nonqualified withdrawals are subject to income tax and a 10% tax penalty.	Your income cannot exceed the limits in effect at the time you redeem the bonds.	Assets you put into custodial accounts are irrevocable gifts to your child. The kiddie tax reduces the advantages of income shifting.

* For details on tax issues regarding college saving plans, contact your tax adviser.
** Expires after 2010 unless extended by Congress.
*** Modified adjusted gross income.

For more information, contact the MEMBERS Financial Services Representative serving CUNA Mutual Group for a no cost, no obligation consultation.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (800) 369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. The Representative may also be a credit union employee that accepts deposits on behalf of the financial institution.

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