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What is an Education Savings Account (ESA)?

An Education Savings Account (ESA – also known as a Coverdell ESA) is used to squirrel away funds for qualified education expenses of the Designated Beneficiary. Contributions are made on an after-tax basis, and earnings generated may not be subject to taxes (upon a qualified distribution).

Important Tip: Contributions made to an Education Savings Accounts do not provide a tax break or tax deduction for the contributor.