Education Savings Accounts

Organizations that provide opportunities for families to open tax-advantaged bank accounts which encourage savings to cover future education expenses (elementary, secondary and/or college); or which open and "seed" accounts for children of a designated age or grade in anticipation of ongoing contributions. Withdrawals are generally tax-free if used for approved educational expenses. Funds in seeded accounts cannot be withdrawn until an established time, e.g., after the child's high school graduation. Included are Qualified Tuition Programs (QTPs) known informally as "529 plans" operated by a state or educational institution, with tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training for a designated beneficiary (such as a child or grandchild); Cloverdell Education Savings Accounts (ESAs) for designated beneficiaries established by individuals whose modified adjusted gross income is below the established amount; other plans recognized by the IRS; and locally established plans that provide a small monetary contribution but no tax advantages.