Education IRA's Contribution Limits

For parents looking for a way to help save for a college education for their child, an Education IRA (also known as a Coverdell Education Saving Account or ESA) can be a great option. However, you need to keep in mind the Education Ira's contribution limits when you do this. Each account can only have a certain of money donated each year, each contributor can only contribute so much per year (and some people are not allowed to contribute at all), and there can only be so many accounts in each child's name.


The Education Ira's contribution limit per account is $500 per tax year. Each account can only have $500 added per year, no matter who the contributor is. That means that if the parents contribute $500, grandparents can't add any more to that account during that tax year.

Best Clickbank Products

When it comes to the Education Ira's contribution limits per contributor, this is a bit more complicated. It depends on the income of the contributor. After a certain income level is reached ($95,000 a year adjusted gross income for an individual and $150,000 a year adjusted gross income for married couples filing jointly) contributions limits are prorated down, meaning that the more you make the less you are allowed to contribute. Once an income of $110,000 (for an individual) or $160,000 (for a married couple filing jointly) is reached, individuals or couples are no longer allowed to contribute to this type of account at all.

Although each account has a $500 per year limit on contributions, it is legal for there to be more than one account in a child's name. However, the total amount donated to all education IRA's in a child's name cannot exceed $2,000 per tax year. So if grandma wants to open an IRA, and mom and dad want to open one too, that is fine. Each account will still have a $500 per year limit, but both parties will be able to make their contributions into the account that they have opened for the child in question.

There is another important thing to mention when talking about Education Ira's contribution limits. Money can only be contributed to these IRA accounts until a child turns eighteen. Once a child reaches eighteen no more contributions may be made into the account. At this point a child is usually finished (or finishing) high school and about to go to college, so this cut off makes sense. However, the money doesn't have to be used right away.