FAQs (data-driven)

Educational Savings Account

• What is an Education Savings Account (ESA)?

  A Coverdell Education Savings Account (ESA) is a savings account designed to help families save for qualified education expenses.

• What can Education Savings Account (ESA) funds be used for?

  ESA funds can be used for qualified higher education expenses as well as eligible elementary and secondary education expenses.

• How does a Coverdell Education Savings Account (ESA) work?

  Contributions are made with after-tax money, and earnings grow tax free when used for qualified education expenses.

• Are Education Savings Account (ESA) contributions tax deductible?

  Contributions to a Coverdell ESA are not tax deductible.

• Do Education Savings Account (ESA) earnings grow tax free?

  Earnings grow tax free until distributed for qualified education expenses.

• Who can be the beneficiary of an Education Savings Account (ESA)?

  The beneficiary must generally be under age 18 or qualify as a special needs beneficiary.

• What is the annual Education Savings Account (ESA) contribution limit?

  Total ESA contributions cannot exceed $2,000 per beneficiary each year.

• Can multiple people contribute to an Education Savings Account (ESA)?

  Multiple contributors may contribute, but combined annual contributions cannot exceed the yearly limit per beneficiary.

• Can Education Savings Account (ESA) funds be used for K-12 education expenses?

  ESA funds may be used for qualified elementary and secondary education expenses.

• Is an Education Savings Account (ESA) good for college savings?

  Yes. ESAs help families save for future education expenses with potential tax advantages.