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Self-Directed IRAs

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What is a SDIRA?

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Access the largest knowledge base for Self-Directed IRAs. Expand your investor knowledge with articles, whitepapers, practical guides and tons of other educational resources.

About Entrust

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What We Do

For 40 years, The Entrust Group has provided account administration services for self-directed retirement and tax-advantaged plans. Entrust can assist you in purchasing alternative investments with your retirement funds, and administer the buying and selling of assets that are typically unavailable through banks and brokerage firms.

An IRA contribution refers to the amount you can deposit into an IRA each year, either personally or through an employer-sponsored plan. Contributions can be made via check, wire transfer, or cash, and there are specific rules and requirements for each type of IRA. Contributing to an IRA is optional and not mandatory every year.

Each type of self-directed IRA has its own annual contribution limit and deadline, set by the IRS. These limits, updated annually, apply to traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, individual 401(k) plans, HSAs, and ESAs. For detailed information on each account's contribution limits, see the sections below.

Traditional IRA Contribution Limits

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Traditional IRA Contribution Deadline

  • The 2023 tax year deadline is April 15, 2024.
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Traditional IRA Conversion Deadline

  • The 2023 traditional to Roth IRA conversion deadline is December 31, 2023.
Traditional IRA Contribution Limits
  2023 2024
Up to age 50 $6,500 $7,000
Catch-Up Contributions Age 50+  $1,000 $1,000
Total Contribution if Over the Age of 50  $7,500 $8,000
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Eligibility for Traditional IRA

  • To contribute to a traditional IRA, the account holder must have earned taxable income during the year.
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Other Important Information

  • The account must be established before the tax deadline for the year that the contribution applies.
  • The IRA contribution limits do not apply to transfers or rollovers.
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How to Claim a Tax Deduction for your IRA Contribution

Traditional IRAs are tax-deferred, meaning that you don’t have to pay tax on any interest or other gains that the account earns until you withdraw the funds. Contributions you make to the account may entitle you to a tax deduction but have certain limitations:

If you have a retirement plan at work:

  • Your deduction may be limited if you (or your spouse, if married) are covered by a retirement plan at work and your income exceeds the levels in the table below.

If you don't have a retirement plan at work: 

  • Your deduction is allowed in full if you (and your spouse, if married) aren’t covered by a retirement plan at work.
Traditional IRA Modified Adjusted Gross Income Limits
  2023 2024
Single Active Participant  $73,000 to $83,000 $77,000 to $87,000
Married Active Participant, Filing Joint Tax Return $116,000 to $136,000 $123,000 to $143,000
Married Active Participant, Filing Separate Tax Returns $0 to $10,000 $0 to $10,000
Spouse of an Active Participant  $218,000 to $228,000 $230,000 to $240,000

Roth IRA Contribution Limits

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Roth IRA Contribution Deadline

  • The 2023 tax year deadline is April 15, 2024.
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Roth IRA Conversion Deadline

  • The 2023 traditional IRA to Roth IRA conversion deadline is December 31, 2023.
Roth IRA Contribution Limits
  2023 2024
Up to age 50 $6,500 $7,000
Catch-Up Contributions Age 50+  $1,000 $1,000
Total Contribution if Over the Age of 50  $7,500 $8,000
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Eligibility for Roth IRA

  • The account holder must have taxable earned income.
  • There are income limits that determine eligibility. Check out the Roth IRA Contribution Limits MAGI Phase-Out Ranges in the table below.
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Other Important Information

  • The account must be established before the tax deadline for the year that the contribution applies.
  • The IRA contribution limits do not apply to transfers or rollovers.
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Conversion - Funding a Roth IRA Beyond Normal Limits

If contributing directly to a Roth IRA for the year is restricted because of your income, you can still fund a Roth by converting any portion of your traditional IRA to a Roth IRA.

  • You will need to pay taxes on any money in your traditional IRA that hasn’t already been taxed. Carefully calculate the tax implications of a Roth IRA conversion before you decide. Contact us for more information on this topic.
Roth IRA Contribution Limits MAGI Phase-Out Ranges
  2023 2024
Single Individuals $138,000 to $153,000 $146,000 to $161,000
Married, Filing a Joint Tax Return  $218,000 to $228,000 $230,000 to $240,000
Married, Filing Separate Tax Returns  $0 to $10,000 $0 to $10,000

SIMPLE IRA Contribution Limits

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SIMPLE IRA Contribution Deadlines

  • Employee contributions (deferrals) are due within seven business days after the amount is deducted from their pay.
  • Employer contributions are due by the employer's tax return date plus extensions.
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SIMPLE IRA Information

A SIMPLE IRA is an employer-sponsored plan for businesses with 100 or fewer employees. Contributions come from both employee salary reductions and employer non-elective or matching contributions (similar to those found in a 401(k) plan).
SIMPLE IRA Contribution Limits
  2023 2024
Employee Elective Deferrals $15,500 $16,000
Catch-Up Elective Deferral Contribution Age 50+  $3,500* $3,500*
Your employer can elect from two different contribution methods. Check with your employer which option they have chosen. Employer contributions are in addition to your elective deferrals.
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Eligibility for SIMPLE IRAs

  • Any business, sole proprietor, partnership, or corporation with fewer than 100 employees who earned at least $5,000 in the preceding year.
  • An employer cannot maintain and contribute to any other employer retirement plan in the same calendar year.
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Other Important Information

  • SIMPLE IRAs generally require the employer to match an employee's salary reduction contributions on a dollar-for-dollar basis, up to 3% of the employee's compensation.
  • Instead of matching contributions, an employer could choose to make non-elective contributions of 2% of each eligible employee’s contribution.
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SIMPLE IRAs - Retirement Made Easy

SIMPLE IRAs impose fewer administrative burdens on employers compared to other types of employer-sponsored plans. For instance, SIMPLE plans are not subject to discrimination tests, unlike 401(k) plans. They are also flexible in that contributions may come from both the employee and employer.

SEP IRA Contribution Limits

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SEP IRA Contribution Deadlines

  • The SEP IRA contribution deadline is the employer's tax return date plus extensions.
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SEP IRA Information

A Simplified Employee Pension Plan (SEP) allows an employer to contribute on a tax-favored basis to IRAs owned by its employees. Under a SEP, a traditional IRA is set up by or for an employee to accept the employer’s contributions.

SEP IRA Contribution Limits

SEP employer contribution limits cannot exceed:

1. Up to 25% of compensation, or

2. $69,000 in 2024

  2023 2024
SEP Employer Contribution Limits Up to 25% of compensation, with a maximum of $66,000 Up to 25% of compensation, with a maximum of $69,000
SEP Current Year Minimum Compensation Required $750 $750
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Eligibility for SEP IRAs

  • Any business, sole proprietor, partnership, or corporation is eligible.
  • Any employee that has reached age 21 and has worked for the employer in at least three of the last five years is eligible.
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Other Important Information

  • Plan establishment and contribution can be made up until the employer’s tax return due date (plus extensions).
  • Employer contributions are discretionary and tax-deductible.
  • This plan is not subject to the reporting and disclosure requirements of most retirement plans.
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SEP IRA Contributions for the Self-Employed

Calculating the SEP IRA contribution limit for self-employed persons is a bit more complex. Further details can be found in IRS Publication 560. Consult your tax advisor on this matter if it applies to you.

Individual 401(k) Contribution Limits

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Individual 401(k) Contribution Deadline

  • The 2023 tax year filing deadline is April 15, 2024.
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Individual 401(k) Information

An individual 401(k) is a retirement plan that provides small business owners maximum flexibility and freedom to invest in alternative assets. It brings the same benefits and features of a 401(k), designed for businesses with no eligible rank-and-file employees. 
Individual 401(k) Contribution Limits

 

  2023 2024
Employer Contributions Up to $66,000 Up to $69,000
Employee Elective Deferrals Up to $22,500 Up to $23,000
Catch-Up Elective Deferral Contribution Age 50+ Up to $7,500 Up to $7,500
The employer can contribute up to the smaller of 25% of your compensation up to the maximum limit. Employer contributions and employee elective deferrals in aggregate may not exceed $66,000 for 2023 and $69,000 for 2024. Compensation limits and deductibility apply, so contact your employer for further information
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Eligibility for Individual 401(k)

  • Any business, sole proprietor, partnership, or corporation with no employees other than you and other owners along with spouses who work for the business.
  • Taxable compensation has been received during the year.
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Other Important Information

This type of plan has two components based on your role as both employer and employee:

  • (Employee) Salary deferral, based on earned income, up to the allowed limit
  • (Employer) Profit-sharing contribution, maximum 25% of compensation, up to the allowed limit
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Individual 401(k) - Hassle Free Retirement

An individual 401(k) allows the business owner complete control. You may act as both the employee and employer. Contributions can be made in both capacities and the plan is not subject to discrimination testing since there are no rank-to-file employees.

Health Savings Account (HSA) Contribution Limits

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HSA Contribution Deadline

  • Tax-year 2023 deadline is April 15, 2024.
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HSA Information

A Health Savings Account (HSA) is a tax-advantaged medical savings account for people who are enrolled in an eligible high-deductible health plan (HDHP). You can use the funds for medical expenses, such as prescriptions, eye care, dental, and more. The funds contributed to your HSA are automatically tax-deductible, reducing your taxable income for the year.
Health Savings Account (HSA) Contribution Limits
  2023 2024
High Deductibles/Out-of-Pocket Limits
Single Coverage - Minimum/Maximum $1,500/$7,500 $1,600/$8,050
Family Coverage - Minimum/Maximum $3,000/$15,000 $3,200/$16,100
Health Savings Account Contribution Limits
Single Coverage $3,850 $4,150
Family Coverage $7,750 $8,300
Plus a $1,000 catch-up contribution if you are age 55+
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Eligibility for HSAs

  • You can only make a contribution to an HSA if enrolled in an eligible high-deductible health plan (HDHP). You cannot be covered by another health insurance.
  • You may not make a contribution if you are enrolled in Medicare.
  • You may not make a contribution if you are claimed as a dependent on someone's tax return.
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Other Important Information

  • Contributions must be made in cash - contributions of stock, property, or other assets are not allowed.
  • Your annual contribution limit may be affected by the length of time you have been enrolled in your HDHP.
  • Both you and your employer can contribute to your HSA but the combined funding may not exceed the contribution limits outlined in the table above.
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Health Savings Account (HSA) - Flexible Savings For Medical Expenses

Your contribution doesn't have to be used in a particular year - funds continue to accumulate. This feature is an important one for many as medical expenses may be much larger in a particular year whiles other years may have fewer expenses. It is also worth noting that you do not lose funds if you change your health plan. However, you cannot use HSA contributions to pay for expenses incurred prior to opening the account.

Education Savings Account (ESA) Contribution Limits

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ESA Contribution Deadline

  • The 2023 tax year deadline is April 15, 2024
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ESA Information

A Coverdell Education Savings Account (ESA) is a way to save for your child’s education. Contributions to an ESA are not tax-deductible, but the earnings grow tax-deferred and will be tax-free if used for education.
Education Savings Account (ESA) Contribution Limits
  2023 2024

Annual limit until the child is age 18, though this age limit may be extended if the child has special needs.

 $2,000 $2,000
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Eligibility for ESAs

  • Any adult or entity can establish an Education Savings Account (ESA) for any child below the age of 18.
  • Age exceptions apply for special needs beneficiaries.
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Other Important Information

  • The beneficiary does not have to be related to the individual(s) who open the account or make annual contributions to the account.
  • Contributions must be made in cash but you are not required to contribute every year.
  • Funds can be transferred to any eligible family member below the age of 30.
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Education Savings Account (ESA) - IRS Limitations

Not everyone may contribute to a Coverdell ESA. Your eligibility is based on your modified adjusted gross income (MAGI) and tax filing status.

Single filers can contribute to a Coverdell account if their MAGI for the year is less than $110,000. For married couples filing a joint return, the MAGI threshold is $220,000. A trust or corporation can also make contributions to a Coverdell account on behalf of an eligible student. The income limits don’t apply to organizations making ESA contributions.

IRA Contribution Limits - Rules and FAQs

Traditional IRA and Roth IRA Contributions - FAQs

How do I contribute to an IRA?

There are a few different ways you can contribute to your IRA, including 401(k) rollovers, IRA transfers, and direct contributions. For all the details visit our IRA funding page.

How much can I contribute to an IRA?

Contributions limits may vary annually, depending on the type of account you have. The IRS releases new contribution limits for all plans including traditional IRAs, Roth IRAs, SEP and SIMPLE plans, ESAs, and HSAs every year. Check out the current contribution limits here. 

Is my IRA contribution deductible on my tax return?

If neither you nor your spouse is covered by a retirement plan at work, your deduction is allowed in full.

For contributions to a traditional IRA, the amount you can deduct may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. 

You may want to consult with a tax professional to determine if your traditional IRA contribution is tax-deductible. Roth IRA contributions aren’t deductible.

Can I contribute to a traditional IRA or Roth IRA if I’m covered by a retirement plan at work?

Yes, you can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP IRA or SIMPLE IRA plan).

Participation in an employer plan only affects the deductibility of your traditional IRA contribution.

I want to set up an IRA for my spouse. How much can I contribute?

If you file a joint return and have taxable compensation, you and your spouse can both contribute to your own separate IRAs.

The maximum contribution you may contribute for each of your IRAs will be based on the annual limit or the amount of your earned income for the year, whichever is smaller.  If you file a joint return you may both use your combined income to determine the amount you can contribute. Check out the current contribution limits here.

How can I open an IRA?

Opening an IRA with Entrust is easy and can be completed online in as little as 10 minutes. Click here to get started or schedule a free consultation with one of our IRA experts to discuss your financial goals.

SEP IRA Contributions - FAQs

How much can I contribute to my SEP?

Contributions limits may vary year over year. The IRS releases new contributions limits every year. Check out the current SEP IRA contributions limits here. 

How much can I contribute if I’m self-employed?

The same limits on contributions made to employees’ SEP IRAs also apply to contributions for you as a self-employed business. See IRS publication 560 to determine the amount you can contribute. 

Must I contribute the same percentage of salary for all participants?

Yes, most SEPs require you to make allocations proportional to your employees' salary/wages. This means that everyone’s contribution is the same percentage of salary.

If I participate in a SEP plan, can I also make tax-deductible Traditional IRA contributions to my SEP IRA?

Yes, you can make regular IRA contributions (including IRA catch-up contributions if you are age 50 and older) to your SEP IRA. However, the deductibility of your IRA contribution may be reduced or eliminated due to your participation in the SEP plan depending on your income for the year.

Can I make catch-up contributions to my SEP?

No, SEPs are funded by employer contributions only. Catch-up contributions apply only to employee elective deferrals.

Must I contribute to the SEP every year?

No, you are not required to contribute every year. Contributions to a SEP plan are discretionary meaning you can decide every whether you wish to make a contribution or not. 

Do I have to contribute for a participant who is no longer employed on the last day of the year?

Yes, you do, if they are otherwise eligible to receive a contribution. A SEP cannot have a last-day-of-the-year employment requirement. If the employee is otherwise eligible, they must share in any SEP contribution. This includes eligible employees who died during the year as well.

Can I contribute to the SEP IRA of a participant over age 70½?

Yes, you must contribute for each employee eligible to participate in your SEP, even if they are over age 70½. However, the employee is subject to required minimum distributions.

How much of the SEP contributions are deductible?

The most you can deduct on your business’s tax return for contributions to your employees’ SEP IRAs is the lesser of your contributions or 25% of each eligible employee's compensation.

Are employer contributions taxable to employees?

No, contributions to employees’ SEP IRAs are not included in their gross income.

How can I open a SEP IRA?

Opening a SEP IRA with Entrust is easy and can be completed online in as little as 10 minutes. Click here to get started or schedule a free consultation with one of our IRA experts to discuss your options.

SIMPLE IRA Contributions - FAQs

What types of contributions may be made to a SIMPLE IRA plan?

Each eligible employee may make a salary reduction contribution and the employer must make either a:

  • matching contribution or 
  • nonelective contribution. 

No other contributions may be made under a SIMPLE IRA plan.

What is a salary reduction contribution?

A salary reduction contribution is an amount an employee elects to have contributed to his or her SIMPLE IRA, rather than paid in cash. Employers must permit their employees to elect to have salary reduction contributions made at an employee-specified level, expressed as a percentage of compensation for the year or as a specific dollar amount. An employer may not place any restrictions on the amount of an employee's salary reduction contributions, except to comply with the annual limit on salary reduction contributions.

How much may an employee defer under a SIMPLE IRA plan?

To find the SIMPLE IRA deferral limits for the current year, head to our contribution limits page. 

Can I suspend, reduce or increase the amount of matching contributions to our SIMPLE IRA plan in the middle of the year?

No, you cannot suspend or modify your employer matching contributions mid-year. You must make the contributions that you promised your employees before the beginning of the year through a notice.

Do I have to contribute for a participant who isn't employed on the last day of the year?

Yes, you do. A SIMPLE IRA plan cannot have a last-day-of-the-year employment requirement. If the employee is otherwise eligible, they must share in any SIMPLE IRA contribution. This includes eligible employees who die or quit working before the contribution is made.

Can I contribute to a SIMPLE IRA of a participant over age 70½?

Yes, in fact, you must. Employees may not be excluded from participating in a SIMPLE IRA plan based solely on their age.

When must I make the matching and nonelective contributions?

You must make matching and nonelective contributions to the financial institution maintaining the SIMPLE IRA no later than the due date for filing your business's income tax return, including extensions.

How much of the contributions made to employees' SIMPLE IRAs may I deduct on my business's tax return?

You may deduct all contributions made to your employees' SIMPLE IRAs on your tax return.

How can I open a SIMPLE IRA?

Opening a SIMPLE IRA with Entrust is easy and can be completed online in as little as 10 minutes. Click here to get started or schedule a free consultation with one of our IRA experts to discuss your options.

Individual 401(k) Contributions - FAQs

How much can I contribute to my individual 401(k)?

Contribution limits may vary from year to year. Check out the current individual 401(k) contributions limits here. 

Is there a required minimum contribution?

There are no mandatory contributions required.

Who is eligible to contribute to an individual 401(k)?

Businesses whose only eligible employees are the owner(s) and their spouse(s).

Are individual 401(k) contributions 100% tax deductible?

Yes, salary deferral and profit sharing contributions are generally 100% tax-deductible.

Are there any additional compliance requirements for individual 401(k) plans?

Yes, that is why it is good to involve your tax or legal advisor to act as your counsel in maintaining your plan. For more information on individual 401(k) requirements visit the IRS website.

How can I open an individual 401(k)?

Opening an individual 401(k) with Entrust is easy and can be completed online in as little as 10 minutes. Click here to get started or schedule a free consultation with one of our IRA experts to discuss your financial goals.

Health Savings Plan (HSA) Contributions - FAQs

How much can I contribute to a Health Savings Account?

Contribution limits may vary from year to year. Check out the current HSA contribution limits here. 

Who can contribute to a HSA?

Anyone covered under an eligible high-deductible health plan (HDHP) may contribute to an HSA.

You cannot be enrolled in Medicare or any other health coverage that is not permitted by the IRS. See publication 969.

Can I contribute to my HSA account after age 65?

You can keep your HSA account at any age, but you can no longer make new contributions to the account after you have signed up for Medicare Part A or Medicare Part B. 

For most individuals, this means you will no longer be eligible when you turn 65. You lose eligibility as of the first day of the month you turn 65.

What happens if I become eligible to contribute to an HSA mid-year (not January 1)?

You may make a full year’s contribution to the HSA, even if you are eligible for only part of the year. If you make a contribution for the full year when you only had partial-year HSA eligibility, you must remain HSA-eligible through the last month of the following calendar year to avoid taxes and penalties.

Can I make changes to the amount I contribute to my HSA during the plan year?

If you are changing the amount contributed via payroll on a pre-tax basis, check with your employer. You can change the amount you contribute to your HSA at any time during the plan year.

Can my employer or family member contribute to my HSA?

Contributions to HSAs can be made by you, your employer, or both. All contributions are aggregated to determine whether you have contributed the maximum allowed. Additionally, family members may make contributions on behalf of other family members as long as the other family member is an eligible individual.

Can I make catch-up contributions to my HSA?

Yes, individuals 55 and older who are covered by an eligible HDHP can make additional catch-up contributions each year until they enroll in Medicare. The additional catch-up contribution limit is $1,000.

How can I open a Health Savings Account?

Opening a Health Savings Account (HSA) with Entrust is easy and can be completed online in as little as 10 minutes. Click here to get started or schedule a free consultation with one of our IRA experts to discuss your options.

Coverdell Education Savings Account (ESA) Contributions - FAQs

How much can I contribute to a Coverdell ESA?

Contributions limits may vary year over year. The IRS releases new contributions limits every year. Check out the current ESA contributions limits here. 

Who can contribute to a Coverdell ESA?

Parents, grandparents, other relatives, friends, and the child for whom the account is being established can contribute to a Coverdell ESA. Entities who wish to contribute may do so as well.

Are contributions tax-deductible?

No, ESA contributions are not tax-deductible, but all qualified withdrawals used for education expenses are 100% tax-free.

Can the same student have multiple ESAs?

Yes, a student may have multiple ESAs but the maximum combined contribution for the individual is $2,000 per year.

How can I open a Coverdell Education Savings Account?

Opening an Education Savings Account (ESA) with Entrust is easy and can be completed online in as little as 10 minutes. Click here to get started or schedule a free consultation with one of our IRA experts to discuss your options.