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An ESA is an investment tool created for the purpose of paying for the future cost of a child's post-secondary education. The plan allows total after-tax contributions of $2,000 per year for each child until they reach the age of 18. These contributions and their subsequent earnings are tax-free when withdrawn to pay for qualified education expenses.

A qualified education expense is one that is required for the enrollment or attendance by your child at an eligible educational institution, including elementary, secondary or post-secondary institutions.

These expenses include:

• Tuition
• Fees
• Books
• Supplies
• Equipment

The answer to that question is "almost anyone".

There are two key limitations:

• Each child can receive a total of $2,000 per year in contributions from all sources. It does not make a difference if this is done in a single account or multiple accounts designed to benefit the same child.
• A person may be limited in the amount of their contribution if the modified adjusted gross income exceeds $95,000 for single filers or $190,000 for joint filers. Above these income levels, the ability to contribute is phased out. If income exceeds $110,000 for single filers, or $220,000 for joint filers, no contribution is allowed.

The ESA does not specify that the contributor must be a member of the family. With this broad range of potential contributions, it is possible that more than one person may want to contribute for the same child. A coordinated effort should be encouraged to avoid excess contributions.

You can roll over funds from one ESA to a new or existing ESA only. The funds, however, must benefit the same child or an eligible member of the child's family. A rollover contribution does not affect the $2,000 annual contribution limit. Rollovers must be completed within 60 days of the initial distribution and are limited to one per 12-month period.

You may change the designated beneficiary (child). An example of why someone may wish to change the designated beneficiary is the current designated beneficiary has completed their education and there are funds remaining. The only stipulation is that the new designated beneficiary must be an eligible member of the family.

There are several possible family members.

They would include:

• Children, grandchildren and stepchildren,
• brothers, sister, stepbrothers and stepsisters,
• nephews and nieces,
• parents, stepparents and grandparents,
• uncles and aunts,
• spouses of all the family members listed above, and
• cousins.

It is important to remember that even with this extended range of family members, contributions can be made only for those under the age of 18, unless the beneficiary is a special needs beneficiary.

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