What is an Education Savings Account?
Looking for a more flexible investment vehicle for your child’s educational savings? An Education Savings Account or ESA, may be what you’re looking for. It is a savings and investment account which allows you almost as many different options as an IRA, including self-directed investing. It will allow you to save funds for a beneficiary’s future educational expenses, while allowing the income gained on the account to grow tax-free. In addition, no taxes will be due on the funds when it’s time to withdraw them for payment of qualified educational expenses.
Call With Any Question
Affordable | Professional | Quick Setup
30,000 Clients and $3 Billion in Custody
We Can Help You Too!
Education Savings Account Advantages
The ability to put aside funds for your child’s educational costs and not include the gains earned on the account in your annual taxable income is one of the main advantages of creating an ESA.
Unlike a 529 Educational Savings plan, an ESA provides much the same investment options as an IRA, including the option of self-directed investment opportunities that go beyond conventional investment vehicles. A 529 plan is very limited on how those funds can be invested. In addition, you can withdraw the funds as needed for elementary and secondary and post-secondary educational expense that cover a wide range of items, tax-free, as well. 529 plan funds can only be used for post-secondary education expenses.
If the designated beneficiary of an ESA account does not withdraw all the funds in their account by the time they are 30 years of age, the account balance can be transferred to another one of your children who remains under the 30 year age limit.
Education Savings Account Disadvantages
The annual contribution limit for an ESA account is fairly low and is also subject to income guideline limitations as well; issues that you do not have with a 529 plan.
ESA funds must be withdrawn by the beneficiary for qualified educational expenses before they turn 30 years of age or transferred to another eligible child, to avoid taxation and tax penalties; unlike a 529 plan, where there are no age limits for withdrawals.
“With over 30,000 clients and over $3 billion in assets currently under custody, Provident Trust Group provides the security and stability that our clients are looking for in a holding company.”
The Provident Advantage
Provident is owned and operated by a team of tax attorneys and highly qualified professionals who are committed to personalized, timely service. At Provident, your priorities are our priorities.
Complex Transactions Simplified
The Provident approach focuses on simplifying the complex. We make sure that every IRS recording and reporting requirement is met and that our clients fully understand what their options and limitations are in regard to setting up an Education Savings Accounts for their children.
All it takes is a phone call, to begin your relationship with the professionals at Provident, though we’d be happy to meet you in person at our Las Vegas office as well.
Give us a call at (888) 855-9856. We’d be happy to answer your questions related to setting up and investing through a Education Savings Account or any other self-directed investment options that you are considering.