Education Savings Account

Anyone subject to certain Modified Adjusted Gross Income (MAGI) limits may contribute to an Education Savings Account for anyone under age 18. The annual investment is limited to $2,000 per child. The funds can be withdrawn tax-free for qualified education-related expenses. These expenses include:

  • Tuition
  • Fees
  • Books
  • Supplies
  • Equipment

Who can contribute to an Education IRA?

Single filers earning up to $95,000 MAGI annually and couples earning up to $190,000 MAGI annually can invest as much as $2,000 per child under age 18 each year. Above these limits, the ability to contribute is phased out. If income exceeds $110,000 for single filers and $220,000 for joint filers, no contribution is allowed. Entities may also contribute to the Education Savings without regard to MAGI limits

Rollover and Beneficiary Information

The Education Savings must be distributed or rolled over into another Education Savings Account for another family member by the time the beneficiary reaches age 30. This change may also occur if the Beneficiary has completed college and there are funds remaning or for any other reason at any time.

Eligible Family Member

More than one change in beneficiary can be made to the following family members:

  • Parents
  • Spouse
  • Brothers and Sisters
  • Children and their spouses
  • Stepchildren and their spouses
  • Nephews and nieces
  • Uncles and aunts
  • Cousins

It is important to remember that even with this extended range of family members, contributions can be made only for those under the age of 18.

For your specific situation, please consult a tax advisor.