Education Savings Accounts

A Coverdell Education Savings Account (or ESA) is an education savings tool that works for elementary, secondary, and post-secondary education.  This would be an account you would use to begin saving for a child’s private K-12 education.  You can contribute up to $2000 per designated beneficiary (aka child) under the age of 18 per year (with special exceptions for a special needs beneficiary).   As long as the designated beneficiary uses the funds for qualified education expenses, the earnings within the account grow tax free.  Examples of qualified education expenses are books, tuition, and fees.  Talk to your accountant for a full listing of what is considered a qualified education expense.  If the beneficiary uses the funds for something other than education (like a car or home purchase), those earnings may be taxable to them.