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Benefits of ESA Contributions

As with a Roth IRA, you must include Coverdell Education Savings Account (ESA) contributions with your income, but your self-directed investments can grow into tax-free distributions for qualifed education expenses. ESA participants (including designated beneficiaries) can make maximum allowable contributions to both their ESAs and qualifed tuition programs (QTPs) without penalty.

Contribution Deadlines and Annual Limits

Tax Year Annual Contribution Limit Contribution Deadline
2019 $2,000 April 15th, 2020
2020 $2,000 April 15th, 2021

You can make a contribution to a new ESA for a given tax year even if you open the account in the following calendar year.
EXAMPLE: You open an ESA on February 1st, 2020. You can still make 2019 contributions until April 15th even though your account was not open during the 2019 calendar year.

Other Key Considerations

  • Your ability to make full ESA contributions may be limited if your modified adjusted gross income (MAGI) falls under either of the following categories:
    • $110,000 or more (for individual tax returns)
    • $220,000 or more (for joint tax returns)
  • Contributions to an ESA may not continue once the designated beneficiary reaches age 18.