• Assets in an ESA grow tax-deferred and may be distributed federal income tax and penalty free when used for qualified education expenses.
• Qualified withdrawals may be used to pay for tuition, fees, books, supplies including computers and, in certain circumstances, room and board for elementary, secondary or higher education.
• Assets can be rolled from the account of one beneficiary to an ESA of a qualified family member.

• Qualified investors (Single tax filers with Modified Adjusted Gross Income (MAGI) of less than $95,000 and joint filers with MAGI of less than $190,000 are eligible to make full contributions. Eligibility phases out between $95,000 and $110,000 MAGI for single filers and between $190,000 and $220,000 MAGI for joint filers.) may contribute up to $2,000 annually on behalf of qualified beneficiaries. Contributions are treated as gifts that qualify for the $11,000 annual gift tax exclusion.
• Corporations and other entities are also permitted to make contributions to an ESA.
• The beneficiary must be a child under the age of 18 unless the beneficiary has "special needs," as defined in IRS regulations.
• The entire account must be distributed before the beneficiary's 30th birthday, unless he or she has "special needs" as defined in IRS regulations.
• Any withdrawals after the beneficiary's 30th birthday or for unqualified expenses will be subject to income taxes and a 10% penalty.

Open A Coverdell ESA