Business and Personal Finance Dictionary

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• EDUCATIONAL SAVINGS ACCOUNT (ESA)
  
  You can put up to $2,000 a year into an Educational Savings Account (ESA) that you establish in the name of a minor child. The assets in the account can be invested any way you choose. There is no limit on the number of accounts you can set up for different children, but no more than a total of $2,000 can be contributed in a single child's name in any one year. Your contribution is not tax deductible, but any earnings that accumulate in the account can be withdrawn tax free if they're used to pay qualified educational expenses for the beneficiary until he or she reaches age 30. The costs can be incurred at any level, from elementary school through a graduate degree. There are no restrictions on using money from an ESA in the same year the student uses other tax-free savings or that or the student you take tax credits for educational expenses. And, you may be able to switch the beneficiary of an ESA if the initial beneficiary doesn't use the money. However, there is a cap on the amount you can earn in any year you contribute to an ESA $110,000 if you file your tax return as a single taxpayer and $220,000 if you file a joint return.
  
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