529 vs UTMA: How to Save for College
Trying to pick a college savings account? Compare a 529 plan, a UTMA/UGMA custodial account, and other options side by side — tax treatment, flexibility, and who ends up controlling the money.
Open the free College Savings comparison →Free, no account, no email — your numbers stay in your browser.
The main college savings options
- 529 plan — money grows tax-free and comes out tax-free for qualified education expenses. High contribution limits, and the parent stays in control. The trade-off: non-education withdrawals owe tax plus a penalty on the earnings.
- UTMA / UGMA custodial account — more flexible (the money can be used for anything that benefits the child, not just tuition), but it legally becomes the child's at the age of majority, and earnings can trigger the "kiddie tax."
- Taxable brokerage account — no special tax break, but total flexibility and no strings. Useful if you want the money usable for college or anything else.
Which one is right?
If you're confident the money is for education and you want the biggest tax advantage plus parental control, a 529 usually wins. If you want flexibility on how the money is eventually used, a UTMA or a plain brokerage account may fit better. Many families use a mix. The free comparison tool lays out the tax treatment, annual limits, and control for each so you can decide.
Frequently asked questions
Is a 529 or UTMA better for college savings?
A 529 gives the best tax break for education and keeps the parent in control, but the money is meant for school. A UTMA is more flexible on how it's used but becomes the child's at adulthood and can trigger the kiddie tax. The right pick depends on how sure you are the money is for college.
Is a 529 plan tax free?
Growth is tax-free and withdrawals are tax-free when used for qualified education expenses. Non-education withdrawals owe income tax plus a 10% penalty on the earnings portion.
What happens to 529 money if my child doesn't go to college?
You can change the beneficiary to another family member, use it for other qualified education (trade school, some K-12, apprenticeships), roll a limited amount to a Roth IRA under current rules, or withdraw it and pay tax plus a penalty on the earnings.
Is this college savings tool free?
Yes — free and private, no account. Your inputs stay in your browser.