Education Savings Account

What is an Educational Savings Account?

An Educational Savings Account can be set up for any child under the age of 18. Parents, guardians, grandparents, or anyone else may contribute up to $2,000 per year until the child reaches the age of 18. Plus, withdrawals are tax-free if used for educational purposes.

Who is eligible for a Educational Savings Account and how much can be contributed?

  • Any child under the age of 18.
  • Each child can receive a total of $2,000 per year in contributions from all sources.
  • Parents, grandparents, other family members, friends or the beneficiary may contribute (provided that the contributor's adjusted gross income meets requirements).
  • Contributions can be made in a single account or multiple accounts designed to benefit the same child.

What is a qualified education expense?

  • Education expenses for enrollment or attendance of your child at an eligible educational institution.
  • These expenses include: fees, tuition, books and supplies.
  • Room and board is considered a qualified expense if the beneficiary is at least a part-time student.

How many Educational Savings Accounts can a child have?

  • There is no limit to the number of Educational Savings Accounts that may be established for a child. But, the total contributions to all educational accounts established must not exceed $2,000 per year.

Are my contributions tax-deductible?

  • Contributions to Educational Savings Accounts are not tax-deductible.

What happens to the remaining funds after a child finishes his/her education?

  • The funds remaining in the Educational Savings Accounts may be withdrawn by the beneficiary by the age of 30; however, it may be subject to both income tax and a 10% penalty.
  • The amount remaining can be rolled over into a new Educational Savings Account for the benefit of a qualified eligible family member.
  • Contributions can be made in a single account or multiple accounts designed to benefit the same child.

Consult your tax advisor for a complete list of qualified expenses.