How it works
You can open an Educational IRA for each of your children (or any minor under 18), and contribute up to $2,000 per year for each account. The money grows tax free, saving you quite a lot in the long run. You can use the money on any educational cost, including books, tuition, school tech, and even room and board.
- Save up to $2,000 per year
- Money grows tax free
- Use on any education-related expense
- Elementary, Secondary, or Post-Secondary education
- Tuition and fees
- Books, supplies, and equipment
- Computer technology and related expenses
- Room and board
- Special needs services
Yes, $2,000.00 per year.
You make non-deductible contributions that may provide tax-free withdrawals, including earnings, down the road.
You can make contributions to a child’s ESA until they are 18 years old.
A “Responsible Individual” directs the investment within the account. They decide when to withdraw money. The “Responsible Individual” is usually a parent of legal guardian of the child. The child may serve as the “Responsible Individual” after becoming an adult.
If the child does not use the money in their ESA before the age of 30, the unused portion can be transferred or rolled over to another eligible family member’s ESA. If the money remains in the ESA when the child turns 30, the ESA will be distributed and taxable to the child.
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