Here’s a post to a story about the differences between an Education Savings Account and a 529 plan from Broke Piggy.
- Contribution Limits – With an ESA, you are only allowed to contribute up to $2,000 per year. Most 529 plans do not have contribution limits, but it depends on each state.
- Usage Of Funds – 529 plans can only be used for college expenses, while ESA funds may be used for elementary or secondary education such as private school.
- Investment Options – With an ESA, you can invest in just about anything, so you have more control over your money. A state 529 plan will give you investment options but doesn’t let you choose specifics. Your investment options with an ESA are the same as what they would be if you were investing in an IRA.
- Tax Advantages – The tax advantages of an ESA versus a 529 plan are basically the same. Money withdrawn from either account is tax-free as long as it is used for qualified education expenses.
- Age Restrictions – Funds within an ESA must be used by the time the beneficiary (the student) turns 30. There are no age restrictions for 529 plans.
Read the entire post here — What’s An ESA And How Is It Different Than A 529 Plan? | Broke Piggy