• user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:2d2d54b66b8e7dd087c6942b2cf7070a' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h1>Education Savings Account - Educational IRA</h1>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:2d2d54b66b8e7dd087c6942b2cf7070a' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:028caf5be938f718a2c5addcea272458' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = 'An <strong>education savings account (ESA) </strong>is designed to help families save for their child\'s educational expenses, whether it be for grade school, private school, or college.&nbsp; An education savings account is a tax advantaged investment account allowing families to make and grow investments at a tax-free rate.&nbsp; When the funds are withdrawn to cover the educational related expenses, they are also withdrawn tax free.&nbsp; Contribution into the account is at the sole discretion of the contributor; however, there are maximum annual limits associated to this plan.<br /><br /><h2>Who is Eligible to Contribute to an ESA?</h2>In order to be eligible to make the full contribution of $2,000&nbsp;to this plan, the contributing party must have a <a href=\"/personal-finance/adjusted-gross-income.html\">modified adjusted gross income</a> (MAGI) of less than $95,000 if they are filing as single, and $190,000 if they are filing jointly.&nbsp; For those individuals who&nbsp;have a MAGI&nbsp;between $95,000 and $110,000&nbsp;&amp; couples who between $190,000 and $220,000, a partial contribution is eligible.&nbsp; To avoid these rules, a corporation is allowed to make tax free contributions on the employees behalf, regardless of income level.<br /><br />An ESA is eligible to receive contributions as long as the child whose name is beneficiary of this plan is under the age of 18.&nbsp; Conversely, the account must make full distribution if the beneficiary dies or reaches the age of 30, whichever comes earlier.&nbsp;If distribution is made after the age of 30, income taxes and a 10% penalty will apply to the gains made in that account.<br /><br /><h2>Contribution Deadline</h2>Contributions for the current calendar year must be made by the April 15 tax deadline in the following calendar year.<br /><br /><h2>ESA Qualified Expenses</h2>A qualified education expense in the eyes of ESA is an expense that is required for enrollment or items which would support the attendance of a school.&nbsp; These can include books, tuition, equipment &amp; supplies, room &amp; board, and any other fees associated to attending shool.&nbsp; <br /><br />In the event that more cash is withdrawn than actually needed for these qualified expenses, the excess distribution will be taxed and subject to a 10% penalty, unless you are receiving a scholarship or die.<br /><br /><h2>How is the ESA different than a 529 Plan?</h2>The major&nbsp;difference&nbsp;lies in the&nbsp;contribution limits of $2,000 for the ESA compared to a 529 plan which has no contribution limits other than the lifetime limit.&nbsp; Secondly, the ESA allows for more flexibility around which types of learning institutions are acceptable; 529 plans are only eligible for accredited colleges.&nbsp; Finally, there are no age limits on a 529 plan as there are for ESA\'s.&nbsp; This can be an issue for those going to medical school or going for PhDs.&nbsp;', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:028caf5be938f718a2c5addcea272458' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:2fda152348bc4ae73408bf0b82608e9a' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide to navigating through the markets.</p><p>Tim is in the Timers Digest Top 10 Rankings for his newsletter and is the Author of \"The Secret Science of Price and Volume”. Ord also contributes to the Stocks &amp; Commodities Magazine.</p>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:2fda152348bc4ae73408bf0b82608e9a' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:4dd69529abed14a5c1c8f3ba7e22f8eb' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for every symbol on the Nasdaq, NYSE, and AMEX.</p><p>Use the fast forward and pause features to analyze your trading decisions with more precision.</p>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:4dd69529abed14a5c1c8f3ba7e22f8eb' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:151e49b034b3ac8a98c1331980da8b69' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2>Related Videos</h2>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:151e49b034b3ac8a98c1331980da8b69' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:e6ff5fe7efa34d641d697991ec512c61' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2>Related Articles</h2>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:e6ff5fe7efa34d641d697991ec512c61' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '4:64dc950e564b7bb494892459d2858add' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<div class=\"left\">\n <p>copyright &copy; 2011 MYSMP.com. All rights reserved.</p>\n <a href=\"/\">Home</a> • <a href=\"/advertise\">Advertise</a> • <a href=\"/sitemap\">Sitemap</a> • <a href=\"/privacy-policy\">Privacy Policy</a>\n</div>\n\n<div class=\"right\">\n <p>Designed &amp; Developed by: bxCreative.com: <a target=\"_blank\" href=\"http://bxcreative.com\">Web design</a></p>\n</div>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '4:64dc950e564b7bb494892459d2858add' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:ef414e50ef3bcd60831c79a8ccac7f37' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2 class=\"pane-title\"><a href=\"/investment-articles\">Investment Articles</a></h2><h2 class=\"pane-title\"><a href=\"/premium-services\">Premium Services</a></h2> <h2 class=\"pane-title\"><a href=\"/free-offers\">Free Offers</a></h2> <h2 class=\"pane-title\"><a href=\"/video\">Videos</a></h2>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:ef414e50ef3bcd60831c79a8ccac7f37' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:7ab206dca588aa9858fab14b55f27503' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>16192 Coastal Highway<br />\nLewes, Delaware 19958</p>\n', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:7ab206dca588aa9858fab14b55f27503' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:fb9bc3d8197c3f70b5a896cc8bae29d6' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<a href=\"/\"><img src=\"/sites/all/themes/bx/images/logo.png\" /></a>', created = 1569060842, expire = 1569147242, headers = '', serialized = 0 WHERE cid = '1:fb9bc3d8197c3f70b5a896cc8bae29d6' in /var/www/html/mysmp/includes/cache.inc on line 109.

Education Savings Account - Educational IRA

An education savings account (ESA) is designed to help families save for their child's educational expenses, whether it be for grade school, private school, or college.  An education savings account is a tax advantaged investment account allowing families to make and grow investments at a tax-free rate.  When the funds are withdrawn to cover the educational related expenses, they are also withdrawn tax free.  Contribution into the account is at the sole discretion of the contributor; however, there are maximum annual limits associated to this plan.

Who is Eligible to Contribute to an ESA?

In order to be eligible to make the full contribution of $2,000 to this plan, the contributing party must have a modified adjusted gross income (MAGI) of less than $95,000 if they are filing as single, and $190,000 if they are filing jointly.  For those individuals who have a MAGI between $95,000 and $110,000 & couples who between $190,000 and $220,000, a partial contribution is eligible.  To avoid these rules, a corporation is allowed to make tax free contributions on the employees behalf, regardless of income level.

An ESA is eligible to receive contributions as long as the child whose name is beneficiary of this plan is under the age of 18.  Conversely, the account must make full distribution if the beneficiary dies or reaches the age of 30, whichever comes earlier. If distribution is made after the age of 30, income taxes and a 10% penalty will apply to the gains made in that account.

Contribution Deadline

Contributions for the current calendar year must be made by the April 15 tax deadline in the following calendar year.

ESA Qualified Expenses

A qualified education expense in the eyes of ESA is an expense that is required for enrollment or items which would support the attendance of a school.  These can include books, tuition, equipment & supplies, room & board, and any other fees associated to attending shool. 

In the event that more cash is withdrawn than actually needed for these qualified expenses, the excess distribution will be taxed and subject to a 10% penalty, unless you are receiving a scholarship or die.

How is the ESA different than a 529 Plan?

The major difference lies in the contribution limits of $2,000 for the ESA compared to a 529 plan which has no contribution limits other than the lifetime limit.  Secondly, the ESA allows for more flexibility around which types of learning institutions are acceptable; 529 plans are only eligible for accredited colleges.  Finally, there are no age limits on a 529 plan as there are for ESA's.  This can be an issue for those going to medical school or going for PhDs. 
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

Tradingsim.com
Day Trading Simulator

Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for...

Send this article to a friend.

Enter multiple addresses on separate lines or separate them with commas.