Sound financial planning combined with effective savings tools can help you accumulate the funds you need to send a child to college. Several key factors should be considered when determining which plan is right for you:

Tax benefits – Some college savings vehicles allow for federal income-tax-free qualified withdrawals or they allow you to defer taxes on your investment until the money is withdrawn. These benefits give your assets a chance to grow faster than they would in a comparable taxable account and can greatly affect how much you are able to accumulate for college.

Flexibility – If your situation changes, you have a financial emergency, your child gets a scholarship, or your child chooses not to go to college, you may wish to change how your accumulated savings are used. Different vehicles offer various levels of flexibility.

Asset ownership – Custodial accounts allow a donor to invest in a child's name and are considered irrevocable gifts. The child has the legal right to assume control over the account when he or she reaches a certain age. In contrast, other plans allow donors to maintain ownership and control over the assets.

Accessibility – College savings plans vary in the treatment of non-qualified withdrawals, from not allowing early access to complete penalty-free liquidity. Others allow you to change the beneficiary to another family member or withdraw funds up to the amount of an awarded scholarship.

Financial aid implications – Parents' income and the saved assets of both child and parent are the two most important factors in determining financial aid eligibility. Since most financial aid formulas consider about 5% of parents' assets and 35% of a child's assets available for college, plans that keep control of assets with the parent have less bearing on your child's chances of receiving aid.

Investment control – Do you feel qualified to choose wise investments? Or would you rather leave the investment choice to a professional? College accounts offer both options.

Income restrictions and contribution limits – These factors will determine your eligibility to use a specific plan as well as how much you can potentially save. Some plans offer no income restrictions; contribution limits will vary.

Following are brief descriptions of the most widely-used college savings plans:

529 Plans – With no income restrictions, 529 Plans allow any donor to invest in a professionally managed portfolio of mutual funds for a child's education. These plans offer high maximum contribution limits (as high as $305,000 in some states) and significant tax benefits. Money in the account has the potential for growth, free from federal and state income taxes. Withdrawals are federally tax-free if used for qualified higher education expenses. Depending on your state of residency, contributions may be tax deductible and earnings may also be free from state taxes. 529 Plans offer the donor the flexibility to transfer the plan to another family member if the designated beneficiary chooses not to attend college. 529 Plan assets not used to pay for qualified higher education expenses can be withdrawn by the donor, although earnings on the withdrawal will be taxed at the participant's rate and a federally mandated 10% penalty on the earnings will apply. In addition, account holders' investment choices are limited to those offered by the particular plan selected.

UGMA/UTMA Brokerage Account – Under the Uniform Gift to Minors Act (UGMA) or the Uniform Transfer to Minors Act (UTMA), donors may invest on behalf of a minor in a custodial brokerage account and receive tax advantages. Potentially all or a portion of earnings may be tax-free or taxed at the minor's rate, however a portion may also be taxed at the parents' highest marginal tax rate. Considered an irrevocable gift, the account cannot be transferred and becomes the property of the designated beneficiary when he or she reaches the age of majority. Until then, the custodian controls the investment; however, the assets in the account must be used for the benefit of the minor. Investment choices are not limited and UGMA/UTMA accounts impose no income restrictions or maximum contributions, but annual contributions of more than $11,000 may be subject to gift tax.

Coverdell Education Savings Account – Formerly known as the Education IRA, a Coverdell education savings account allows the account holder to make annual non-deductible contributions of up to $2,000 to a specially-designated investment trust account. The account grows, free of federal income taxes, and qualified withdrawals from the account may be completely tax-free as well, pending certain requirements. Income restrictions and other eligibility requirements, such as age limits, also apply. The account owner has full control over the assets, is not limited in choice of investments and may change the beneficiary to another family member. However the account is considered an asset of the student, not the parent. Any withdrawals while in college are considered the student's income and the account must be fully withdrawn by the time the beneficiary reaches age 30 to avoid taxes and penalties.

Other Tools – Depending on your needs, your college savings strategy may include gifts, pre-paid tuition plans, Roth IRAs and trusts, among others.