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Account Type Definitions 

529 Plans: Most states have 529 plans, which allow you to grow your funds tax-deferred and then later withdraw these funds tax-free, if used toward qualified education expenses. There are 2 basic types of 529 plans: educational savings plans and prepaid tuition plans.

Coverdell ESAs: Coverdell Education Savings Accounts, previously called education IRAs, allow you to make contributions to a tax-advantaged savings account. Funds withdrawn for educational expenses are not taxed. 

UGMA/UTMA Account: A Uniform Gift to Minors Account (UGMA) or a Uniform Transfer to Minors Account (UTMA) is a flexible investment account that helps minors save or invest. UGMA/UTMA accounts can be used to pay for college but should be considered only after exhausting ESA and 529 plan options.

Taxable Account: A taxable account allows you to deposit money, and buy and sell investments. You'll pay taxes on any earnings in the year in which you earned them. 


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.