The ESA, formerly the Education IRA, has been available since January, 1998. The ESA encourages an affordable, easy to manage savings program for a child's educational expenses. Parents, grandparents, friends, or any family member may open an ESA for a child. If a child does not need to use the ESA funds for educational purposes, the funds may be transferred into an ESA for another family member. The educational expenses that qualify for the ESA include public, private, parochial elementary, secondary, or post-secondary expenses.
Contributions:
You may contribute $2,000.00 per child per tax year. Contributions to the ESA are allowed until the child's 18th birthday. All ESA funds must be used by the time the child reaches the age of 30. Contributions to the ESA are not tax deductible. Contributions can be made to both an ESA and/or a state prepaid tuition program.
Tax Advantages:
Withdrawals for qualified educational expenses* are tax free. A child may receive tax-free withdrawals from the ESA in the same year he/she claims the Lifetime Learning or HOPE Scholarship tax credits. |
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