Planning for a child's education is one of the most
important investments to be made. Sorting through the different
types of education plans is a difficult task but with an experienced
Ramirez & Co. Financial Consultant and the use of our financial
planners, we can determine the best means to save for a child's
education costs.>
|
529
Plan |
UGMA/UTMA |
Education
IRA |
|
Maximum
Contribution
|
$265,000
|
Unlimited
|
$2,000
per year until child turns 18
|
|
Limits
on Income
|
None
|
None
|
Adjusted
Gross Income limits apply
|
|
Age
Limitations
|
None
|
Contributions
must cease when child reaches age of majority
|
No
contributions after age 18, all distributions must be made
by age 30
|
|
Annual
Maximum contribution per donor
|
$50,000
per beneficiary in the first year of a five-year period to
avoid federal gift tax consequences ($100,000 per married
couple)
|
$10,000
per beneficiary per year to avoid federal gift tax consequences
|
$2,000 per
account per year |
|
Account
earnings
|
No
tax on earnings while they remain in the account
|
Taxable
|
No
tax on earnings while they remain in account
|
|
State
tax deductible contributions
|
Varies
by state of residence of account owner
|
No
|
No
|
|
Qualified
use of proceeds
|
Any
accredited post-secondary program in the U.S. and some overseas
|
Limited
to expenses for child only - can not be used for parents expenses
|
Any
accredited program I the U.S. and some overseas
|
|
Account
Management
|
Managed
by holding firm
|
Managed
by custodian
|
Managed
by custodian
|
|
Fund's
removed from donor's estate
|
Yes
|
No
|
Yes
|
|
Donor
may change beneficiary at any time
|
Yes
|
No
|
Yes
|
|
Control
of withdrawals
|
Account
owner only
|
Transfers
to child at age of majority
|
May
be transferred to child at age of majority
|
|
Penalties
for non-qualified withdrawals
|
10%
penalty on earnings only
|
No
|
10%
penalty on earnings only
|
| Taxation
of qualified withdrawals |
Earnings
are taxed at beneficiary's rate
|
Sale
of account assets may trigger capital gains or other taxes
on custodian or child.
|
Tax
free
|
