Saving for education · Other accounts

Other ways to save for learning

A 529 is not the only choice. Here are seven more accounts, what each one is good at, and an example with made-up numbers for each.

Coverdell ESA: $2,000 a year; good for K-12 costs.
NY ABLE: for a disability that began before age 46 (from 2026).
Trump account: one-time $1,000 federal deposit for U.S.-citizen children born 2025 to 2028.
Savings, bonds, Roth IRA, custodial accounts: more flexible, with trade-offs.

General information, not financial, tax or legal advice. Each account has more rules than we can show. Check the official source for each one and ask a tax professional. Facts checked November 7, 2026. Examples use made-up numbers and assumed growth.

📘 Coverdell Education Savings Account (ESA)

Limit

$2,000

a year per child, from all givers together, until the child turns 18.

Pays for

K-12 tuition, tutoring, books, supplies, computer technology and internet used for school; and college costs.

Income limit for givers

The $2,000 shrinks for modified AGI between $95,000 and $110,000 (single) or $190,000 and $220,000 (joint). Above that: $0.

Deadlines

Contributions for a year may be made until the tax-filing due date (no extensions). The money must be used, or moved to a family member under 30, by about age 30.

Growth is free of federal tax when spent on qualified costs. There is no New York deduction. Coverdell accounts are opened at banks and brokerage firms (not through NY 529).

Example with made-up numbers

The Rivera family (joint, modified AGI $150,000) puts $2,000 a year in a Coverdell for 10 years. Assumed growth: 5%.

Put in: $2,000 × 10 = $20,000 End value (5%) ≈ $25,880 Used for: tutoring in 8th grade and a laptop for high school → no federal tax on growth

If their income were $205,000:

Over the start: $205,000 − $190,000 = $15,000 Share of range: $15,000 ÷ $30,000 = 50% Allowed: $2,000 − (50% × $2,000) = $1,000

♿ NY ABLE account

New in 2026: ABLE accounts are open to people whose disability or blindness began before age 46 (it was 26). Source: IRS and Social Security.

Who qualifies

Disability began before 46 and one of: SSI or SSDI because of the disability, blindness, the Compassionate Allowances list, or a doctor's written diagnosis that meets the rules (NY ABLE).

Yearly limit

$20,000

in 2026, from everyone together. A working beneficiary may add more in some cases.

SSI

The first $100,000 does not count as a resource for SSI. Medicaid continues even if SSI is paused (SSA).

Pays for

Education, housing, transportation, job training, assistive technology, health, personal support and more (NY ABLE).

Growth is free of federal tax when used for qualified disability expenses. Ask NY ABLE about New York tax rules, fees and the minimum to start. A 529 can be rolled into an ABLE account for the same person or a family member, within the yearly limit.

Example with made-up numbers

Sam is 15. His disability began at age 5, and he has an IEP at school. His family puts $200 a month in NY ABLE for 10 years. Assumed growth: 4%.

Put in each year: $200 × 12 = $2,400 (under the $20,000 limit) Put in, 10 years: $24,000 End value (4%) ≈ $29,450 (under $100,000, so it does not count for SSI) Used for: a reading device, a tutor, and later community college

🧒 UTMA / UGMA custodial account

An adult (the custodian) manages money or investments that legally belong to the child. In New York, the child gets control at 21 for most gifts, or 18 in some cases (NY EPTL §7-6.20).

Can pay for anything that benefits the child, not only school.
No special tax break. The "kiddie tax" applies to a child's investment income: for 2026, the first $1,350 is not taxed, the next $1,350 is taxed at the child's rate, and more than $2,700 is taxed at the parents' rate (IRS Rev. Proc. 2025-32).
On the FAFSA it is the student's asset, which counts more than a parent's.
A gift to a UTMA cannot be taken back.

Example with made-up numbers

Grandpa gives $10,000 of stock to a UTMA for his grandson. In 2026 the stock pays $3,000 in dividends.

First $1,350 → no tax Next $1,350 → taxed at the child's rate Last $3,000 − $2,700 = $300 → taxed at the parents' rate At 21, the grandson decides how to use all of it.

💵 U.S. savings bonds for education (Series EE and I)

Interest can be free of federal tax if you cash the bonds and pay college tuition and fees for yourself, your spouse or your dependent, or move the money into a 529 or Coverdell (26 U.S.C. §135, Form 8815).
The bond must be issued after 1989 to an owner who was at least 24 before the issue date. Bonds in the child's name do not qualify.
Married couples must file jointly.
Income limits for 2026: the break shrinks for modified AGI from $101,800 to $116,800 (single) or $152,650 to $182,650 (joint). These change every year.
Savings bond interest is not taxed by New York State or local governments. Buy at TreasuryDirect.gov.

Example with made-up numbers

Dad (age 35) buys $5,000 of electronic EE bonds in his own name. Treasury guarantees EE bonds double in value if held 20 years. After 20 years he cashes them for $10,000 and pays $12,000 of his daughter's tuition the same year.

Interest earned: $10,000 − $5,000 = $5,000 Tuition paid (≥ $10,000) → all of the interest can count If income is under the start of the range → $5,000 of interest is federal-tax-free If income is halfway through the range → about half ($2,500) is tax-free

🏦 Using a parent's Roth IRA for education

A Roth IRA is retirement savings. For 2026 you can put in up to $7,500 (more if 50+), up to your earned income, if your income is under the Roth limits (single $153,000 to $168,000; joint $242,000 to $252,000 phase-out).
Your contributions can come out at any time without tax or penalty.
Earnings taken out before age 59½ are usually taxed, but the 10% early-withdrawal tax does not apply to qualified higher education costs (IRS Pub. 970).
Retirement accounts are not listed as assets on the FAFSA, but money you take out counts as income on a later FAFSA.
Think "retirement first": students can borrow for college, but nobody lends for retirement.

Example with made-up numbers

Mom has put $30,000 into her Roth IRA over the years. It is now worth $42,000.

She takes out $30,000 for tuition → it is all her own contributions → no tax, no penalty If she took out $35,000 instead: $30,000 contributions → no tax $5,000 earnings → income tax, but no 10% penalty (college costs)

🇺🇸 Trump accounts (new, 2025 law)

A Trump account is a new kind of savings account for children, created by the 2025 tax law (the IRS calls it the "Working Families Tax Cuts"). What is live in 2026:

Who: a child under 18 with a valid Social Security number. A parent or guardian makes the election, on IRS Form 4547 (with a tax return) or at trumpaccounts.gov.
$1,000 federal pilot deposit: one time, for U.S.-citizen children born January 1, 2025 through December 31, 2028 with a valid SSN. You must sign up to get it.
Deposits: began July 4, 2026. Family and others can add up to $5,000 a year; an employer can give up to $2,500 of that tax-free.
Investments: only certain index funds of mostly U.S. stocks, with small fees.
Withdrawals: generally not allowed until the year the child turns 18. After that it is treated much like a traditional IRA.
Not settled: how New York taxes it and how the FAFSA treats it. Ask before you count on it for college.

Example with made-up numbers

Baby Mia is born in March 2026, a U.S. citizen with an SSN. Her parents sign up with Form 4547. She gets the $1,000 pilot deposit, and her family adds $50 a month for 18 years. Assumed growth: 5%.

Put in: $1,000 + ($50 × 12 × 18) = $1,000 + $10,800 = $11,800 End value (5%) ≈ $19,915 The $1,000 alone ≈ $2,455 after 18 years Money is locked until the start of the year Mia turns 18.

💰 High-yield savings account

Simple, flexible and safe at an insured bank or credit union: the FDIC (or NCUA) insures up to $250,000 per depositor, per bank, per ownership category.
Interest is taxed every year (federal and New York). No special education break.
Best for costs that come soon: test fees, a calculator, a laptop, a class trip, a summer program.
Online banks often pay more interest than a regular savings account. Rates change.

Example with made-up numbers

A family saves $25 every week for one year. Assumed interest: 4% a year.

Put in: $25 × 52 = $1,300 Interest (4%) ≈ $25 Total ≈ $1,325 → enough for a graphing calculator and AP exam fees (Tax is due on the $25 of interest.)

❓ Questions

Can I have a 529 and a Coverdell for the same child?

Yes. You cannot use the same expense twice for tax-free money, so keep receipts and match each withdrawal to a cost (IRS Pub. 970).

Does an ABLE account replace a supplemental needs trust?

Not always. Some families use both. Ask a lawyer who knows disability planning and NY ABLE.

Can the Trump account $1,000 pay for school?

Not while the child is under 18; money is locked until the year the child turns 18. After that, IRA-like rules apply. Ask a tax professional before using it for college.

Should I put savings in my child's name?

Money in the child's name (like a UTMA) counts more on the FAFSA and becomes the child's to control at 21 (or 18). Many families keep college money in a parent-owned 529 instead.

Disclaimer. General information, not financial, tax or legal advice. Goal100 does not sell or recommend any account. Investments can lose value. Check with the official program and a qualified professional. Last checked November 7, 2026.

🔗 Official sources (checked November 7, 2026)

26 U.S.C. §530 (Coverdell ESA): law.cornell.edu/uscode/text/26/530
IRS Publication 970, Tax Benefits for Education (Coverdell, savings bonds, IRA withdrawals for education): irs.gov/publications/p970
IRS, ABLE accounts (age 46 from 2026; $20,000 for 2026): irs.gov ABLE accounts
Social Security, Spotlight on ABLE accounts ($100,000; age 46 from 1/1/2026): ssa.gov ABLE spotlight
NY ABLE, Eligibility requirements: mynyable.org requirements; Qualified uses: mynyable.org qualified uses
NY Estates, Powers and Trusts Law §7-6.20 (UTMA ends at 21 or 18): nysenate.gov
IRS, Rev. Proc. 2025-32 (2026 kiddie tax $1,350; savings bond income limits; gift exclusion): irs.gov rp-25-32.pdf
26 U.S.C. §135 (savings bond education exclusion; owner age 24): law.cornell.edu/uscode/text/26/135
TreasuryDirect, Savings bonds and education: treasurydirect.gov
IRS, 2026 IRA limit $7,500 and Roth income ranges (IR-2025-111): irs.gov newsroom
IRS, Trump accounts guidance (IR-2025-117, Dec. 2, 2025): irs.gov newsroom
IRS, Trump accounts sign-up and $1,000 pilot (IR-2026-42, Mar. 31, 2026): irs.gov newsroom
U.S. Treasury, Trump Accounts launch (July 4, 2026): home.treasury.gov; trumpaccounts.gov
FDIC, Deposit insurance: fdic.gov deposit insurance

Back to the chooser New York's 529