Education Savings Account (ESA)

Account description

Tax-deferred account with earnings and withdrawals free from federal income tax if used for qualified education expenses. Contribution limits apply.

Eligibility restrictions

• Single with modified adjusted gross income less than $95,000 (partial contribution between $95,000 and $110,000) 
• Joint with modified adjusted gross income less than $190,000 (partial contribution between $190,000 and $220,000)

Contribution age limits

18, must be used by beneficiary by age 30

Maximum yearly contribution per student

• $2,000 a year per student until age 18
• Exception for children with special needs

Minimum initial investment

Varies by account from $0 to $100,000

Taxation of earnings and withdrawals

• Earnings are free from federal income tax if used for qualified expenses before the student turns age 30 (exception for children with special needs)
• Withdrawals are free from federal income tax if used for qualified expenses

Qualified expenses

Qualified education expenses including tuition, room and board, fees, books, equipment, and supplies at an eligible elementary, high school, and post-secondary school, as well as computer equipment for elementary and high school (restrictions apply).

Penalties for non-qualified withdrawals

• Earnings subject to income tax
• 10% IRS penalty on earnings, with certain exceptions

Ownership of assets

Transactions reported to IRS with student’s tax identification number; depositor (adult) has transaction authority.

The Education Savings Account can remain for the beneficiary of the Education Savings Account until the beneficiary turns 30.  Any balance remaining in the Education Savings Account at the time the beneficiary becomes 30 years old must be distributed within 30 days.

Commissions and fees

Annual Custodial Fees and waivers vary by account

Account description

FDIC-insured, tax-deferred savings account with earnings and withdrawals free from federal income tax if used for qualified education expenses. Contribution limits apply.

Deposit options include

• Savings Accounts
• CDs (Time Accounts)

Minimum opening deposit

• $100 for Savings Accounts
• $1,000 for CDs (Time Accounts)

Account benefits

• Tax deferred, allowing your savings to grow faster
• FDIC insured up to applicable limits

Account features

• Online account access
• Transfer funds online from a Wells Fargo checking or savings account to contribute to an ESA

Fees

• No annual custodial fee
• Other fees may apply. Contact a Wells Fargo banker for more information.