Beyond the basic
distinctions of the two types of QSTPs there are myriad differences in the program design
among the many different QSTPs in operation today. The following list describes many of
the areas in which the programs may differ from one another.
- What eligibility restrictions are imposed by the QSTP on the naming of a designated
- Does the beneficiary need to be less than a specified age, or specified grade in school?
- Does a birth certificate need to be provided?
- Can a non-U.S. citizen be a designated beneficiary?
- Does the designated beneficiary need a social security number?
- Does the QSTP allow the donor to name himself as designated beneficiary?
Comment: The tax law appears to contain no restrictions on who can be
named as the designated beneficiary. Many prepaid tuition plans have age or grade
restrictions designed to ensure that funds can be invested by the program for a certain
State residency requirements
Minimum and maximum contributions
Time limits on use of account
Eligible education expenses
Payment of qualified higher education expenses
Effect on financial aid eligibility
Rollovers between QSTPs
Safety of the investment
State income tax
State inheritance and gift tax
Other state benefits
Satisfaction with the program
Qualification under IRC section 529