An investment tool created for the purpose of paying for the future cost of a child's post-secondary education.  The plan allows total after-tax contributions of $2,000 per year for each child until they reach the age of 18. These contributions and their subsequent earnings are tax-free when withdrawn to pay for qualified education expenses.

What Is A Qualified Education Expense?

A qualified education expense is one that is required for the enrollment or attendance by your child at an eligible educational institution, including elementary, secondary or post-secondary. These expenses include tuition, fees, books, supplies, and equipment.

Who Can Contribute To An Education Savings Account?

The answer - "almost anyone".

There are two key limitations:

* Each child can receive a total of $2,000 per year in contributions from all sources.  It does not make a difference if this is done in a single account or multiple accounts designed to benefit the same child.
*A person may be limited in the amount of their contribution if their modified adjusted gross income exceeds $95,000 for single filers or $190,000 for joint filers.  Above these income levels, the ability to contribute is phased out.  If income exceeds $110,000 for single files, or $220,000 for joint filers, no contribution is allowed.

The ESA does not specify that the contributor must be a member of the family.  With this broad range of potential contributors, it is possible that more than one person may want to contribute for the same child.  A coordinated effort should be encouraged to avoid excess contributions.