A popular savings vehicle for college expenses, both deposits to and withdrawals from this account are tax-free if used for qualified higher education expenses. The beneficiary does not necessarily have to be a minor. Contributions are made after tax, but withdrawals used for qualified education expenses are tax free at the Federal level (may be subject to state taxes). If withdrawals are not used for education, they will be taxed at ordinary income rates AND with a 10% penalty (like early IRA withdrawals). There are no age limits for the contributions/distributions, and these often have no limits for contribution amounts (vary by state). Beneficiaries can be reassigned if the primary does not want/use the funds, and no penalty results if the contingent beneficiary is related to the first. Money in the account remains under the parent’s/owner’s control, and there is no requirement to release the funds to the beneficiaries like in a Coverdell or UGMA/UTMA. The owner of the plan has full withdrawal access.