--- title: What's the best way for you to save for college? description: To help you choose the best college savings option, here's how each plan stacks up in the categories that matter most. 529 COLLEGE SAVINGS PLAN… authors: - name: timestaff url: https://money.com/author/timestaff/ articles: 459 covers: - Banking - Career Advice - Credit - Credit Cards - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes former_staff: true published: '2013-01-11T02:21:39.000Z' modified: '2013-01-11T02:21:39.000Z' section: Education tags: - 529 plan - College - college saving word_count: 356 canonical: https://money.com/whats-the-best-way-for-you-to-save-for-college/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![What's the best way for you to save for college?](https://money.com/img/logo-social.png) To help you choose the best college savings option, here's how each plan stacks up in the categories that matter most. ### **529 COLLEGE SAVINGS PLAN** **Maximum contribution:** Annual: Typically, none. But if you contribute more than $14,000 in any given year, you'll trigger gift taxes. Lifetime: As much as $300,000 in many plans. **Tax treatment:** Federal: Tax-deferred growth, tax-free withdrawals for college expenses. State: Many states provide tax benefits to residents using their plan. **Financial aid impact:** Maximum of 5.64% of value will count against you. **Restrictions on withdrawal and spending:** Withdrawals must cover qualified higher education expenses. **Potential problems:** Limited investment options. Some states funds have comparatively high expense ratios**.** ### **529 PREPAID TUITION PLAN** **Maximum contribution:** Annual: Typically, none. But if you contribute more than $14,000 in any given year, you'll trigger gift taxes. Lifetime: Up to $220,000 in some plans. **Tax treatment:** Federal: Tax-deferred growth, tax-free withdrawals for tuition. State: Many states provide tax benefits to residents using their plan. **Financial aid impact:** Maximum of 5.64% of value will count against you. **Restrictions on withdrawal and spending:** Withdrawals only cover tuition. **Potential problems:** Someplans are facing financial difficulties and may not have the funds to meet their obligations. Most prepaid tuition plans require either owner or beneficiary of plan to be a state resident. ### PERMANENT LIFE INSURANCE **Maximum contribution:** None. **Tax treatment:** Federal: Tax-free access to the cash value of your policy. **Financial aid impact:** These assets are not counted against you in financial aid. **Restrictions on withdrawal and spending:** None. **Potential problems:** High fees; lose money if withdrawals are made within the first few years. ### **ROTH IRA** **Maximum contribution:** Annual: $5,500. Lifetime: Depends on income. **Tax treatment:** Federal: Tax-deferred growth, and tax-free withdrawal of contributions if used for college. Earnings can be withdrawn tax-free after you turn 59 1/2. **Financial aid impact:** These assets are not counted against you in financial aid. **Restrictions on withdrawal and spending:** None (10% early withdrawal penalty waived for qualified higher education expenses). **Potential problems:** Earnings are subject to income tax and withdrawals can impact future financial aid eligibility. **NEXT:** [What's the best 529 savings plan for you](http://money.cnn.com/2013/01/10/101/college-101/529-savings-plan/index.html) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/whats-the-best-way-for-you-to-save-for-college/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Education", "item": "https://money.com/education/" }, { "@type": "ListItem", "position": 3, "name": "Paying for College", "item": "https://money.com/paying-for-college/" }, { "@type": "ListItem", "position": 4, "name": "What's the best way for you to save for college?" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/whats-the-best-way-for-you-to-save-for-college/#webpage", "url": "https://money.com/whats-the-best-way-for-you-to-save-for-college/", "name": "What's the best way for you to save for college?", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2013-01-11T02:21:39.000Z", "mainEntity": { "@id": "https://money.com/whats-the-best-way-for-you-to-save-for-college/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/whats-the-best-way-for-you-to-save-for-college/#breadcrumb" }, "dateModified": "2013-01-11T02:21:39.000Z" }, { "@type": "Article", "headline": "What's the best way for you to save for college?", "articleSection": "Education", "image": [ { "@type": "ImageObject", "url": "https://money.com/img/logo-social.png", "width": 300, "height": 300 } ], "author": [ { "@type": "Person", "name": "timestaff", "url": "https://money.com/author/timestaff/", "@id": "https://money.com/author/timestaff/#author" } ], "publisher": "https://money.com/#organization", "datePublished": "2013-01-11T02:21:39.000Z", "description": "To help you choose the best college savings option, here's how each plan stacks up in the categories that matter most. 529 COLLEGE SAVINGS PLAN…", "abstract": "To help you choose the best college savings option, here's how each plan stacks up in the categories that matter most. 529 COLLEGE SAVINGS PLAN…", "@id": "https://money.com/whats-the-best-way-for-you-to-save-for-college/", "inLanguage": "en-US", "dateModified": "2013-01-11T02:21:39.000Z", "wordCount": 356, "keywords": [ "529 plan", "College", "college saving" ], "about": [ { "@type": "Thing", "name": "Education", "sameAs": [ "https://en.wikipedia.org/wiki/Education" ] }, { "@type": "Thing", "name": "Student financial aid in the United States", "sameAs": [ "https://en.wikipedia.org/wiki/Student_financial_aid_in_the_United_States" ] } ] } ] } ```