• Annual contributions of $2,000 per beneficiary under age 18 can be made to an ESA. This amount is in addition to limits for other types of IRAs. After December 31, 2010, the annual limit will decrease to $500.

• Contributions are not tax deductible, but earnings grow tax free as long as distributions are used for qualified education expenses.

• Qualified education expenses include: tuition, certain room and board charges, books, and other supplies. Tax-free distributions can also be used to pay elementary and secondary school tuition and expenses, including: tutoring, room and board, uniforms, and extended day care programs; and to purchase computer technology and equipment, including Internet access and services.

• Eligibility to make contributions is phased out at adjusted gross income levels of $95,000 to $110,000 for single taxpayers and $190,000 to $220,000 for married taxpayers filing jointly. If your income exceeds those limits, you can ask other relatives to contribute for your children. Your child can also make the contribution to his/her own ESA, since there is no earned income requirement for contributions.

• Corporations and other entities can make contributions to ESAs, regardless of their income.

• Contributions can be made until April 15 of the following year.

• Distributions must be made before the beneficiary turns 30. Any funds not used for qualified education expenses are subject to normal income taxes and a 10% federal income tax penalty. However, the ESA balance can be rolled over to another ESA for a different family member.

• Contributions can be made to both an ESA and a section 529 plan for the same beneficiary in the same year.

• You can claim the Hope scholarship credit or lifetime learning credit in the same year tax-free distributions are taken from an ESA, as long as the credit is not claimed for amounts paid with the tax-free distributions.

• For special-needs beneficiaries, contributions can now be made after age 18, and tax-free distributions can be taken after age 30.

Keep in mind that many of the provisions related to ESAs are scheduled to expire in 2011 unless further congressional action is taken.