1. Education Savings Account: Introduction
  2. Education Savings Account: Qualifying To Contribute
  3. Education Savings Account: Opening An ESA
  4. Education Savings Account: Avoiding Taxes On Distributions
  5. Education Savings Account: Conclusion

By Reyna Gobel

Recap:

  • Anyone can contribute to an ESA on behalf of a child.
  • ESAs must be started and funded before age 18, but after a child is born.
  • Co-ordinate with other contributors as much as possible so you don't accidentally cause your son or daughter to pay taxes.
  • The maximum contribution is calculated two ways: maximum contribution per individual and maximum per child.
  • You can't contribute to an ESA if your modified adjusted gross income is above $110,000 as a single person or $220,000 as a married couple. Contributions are calculated on a sliding scale for individuals with MAGIs above $95,000 and below $110,000. Married couples contribute on a sliding scale if their combined MAGI is above $190,000 and below $220,000.
  • Contributing to an ESA isn't the only way to save for your child's education. Also consider 529 plans. Contributions aren't based on income and can be larger amounts.
For further reading, check out How Expanded Kiddie Tax Affects Families, How And When To Switch Your 529 Plan, Filing Your Child's First Income Tax Return and our Student Loans Tutorial.


Related Articles
  1. Financial Advisor

    Why Coverdell ESAs May Trump 529 Plans

    Coverdell ESAs still trail 529 plans in popularity by a wide margin due to their low contribution limits. But these accounts can be a viable alternative.
  2. Investing

    Top 7 Mistakes To Avoid On Your 529 Plan

    A 529 can go a long way to easing the burden of college education, as long as you start saving as soon as possible after your child is born.
  3. Personal Finance

    529 Plan or Coverdell? How to Choose College Savings Plans

    There are two options when it comes to tax-free college savings plans: a 529 plan or a Coverdell ESA. Here's how they compare.
  4. Personal Finance

    Opening Your Child's First Bank Account

    Teach your children to save up to meet their spending - and saving - goals.
  5. Personal Finance

    Teaching Your Child To Be Financially Savvy

    If you start today, you can set your kids up for a lifetime of smart money management.
  6. Personal Finance

    Paying For College In An Economic Downturn

    There are many ways to fund a child's education including loans, scholarships, grants and protecting your investments.
  7. Personal Finance

    How An Allowance Helps Kids Get Money-Smart

    Discover which of these three reward techniques teaches the best lessons about money.
  8. Trading

    How To Teach Your Child About Investing

    Find simple and easy instructions on how to introduce your kids to the stock market.
  9. Managing Wealth

    Should You Hire Your Kids to Work for You?

    If you own a small business, hiring your kids is a no-brainer. But there may also be reasons not to. Here are six questions to ask yourself.
  10. Personal Finance

    529 Plan Contribution Limits in 2016

    Learn about the contribution and account balance limits on 529 plan accounts and discover how these contribution limits differ in each state.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center