Continuing Education Savings Account A CESA is a custodial account established for a child, as the designated beneficiary, to pay for his or her qualified education expense. CESA earnings are tax deferred and, if the assets are used for qualified education expense, distributions will not be taxed.
The term “qualified higher education expense” means tuition, fees, books, supplies, and equipment required for the enrollment or attendance at an eligible higher education institution such as an area vocational school or university.
The account can be started with as little as $500 and you may contribute up to $2,000.00 per year. One important note: when a nonqualified distribution is taken, a ratio of contributions and earnings is computed, and the earnings portion is then subject to taxes and a 10% penalty.
If you have any additional questions or need more information, please call us or consult your financial advisor.
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