IRS Form 5305-EA – Are you looking for a tax-advantaged way to save for your child’s K-12 or college education? IRS Form 5305-EA establishes a Coverdell Education Savings Custodial Account (Coverdell ESA) under Section 530 of the Internal Revenue Code. This powerful tool lets earnings grow tax-free and qualified withdrawals remain tax-free when used for education expenses.
Financial institutions and custodians use this IRS-pre-approved model form to open a Coverdell ESA. Families favor it for its flexibility across elementary, secondary, and higher education costs—unlike many 529 plans with stricter rules.
In this comprehensive guide, you’ll learn everything about Form 5305-EA: its purpose, eligibility, contribution limits for 2026, step-by-step completion instructions, tax benefits, and how it compares to alternatives. All information draws directly from official IRS sources, including the current Form 5305-EA (Rev. October 2016), Topic No. 310, and Publication 970 (2025).
Download the official IRS Form 5305-EA PDF here: https://www.irs.gov/pub/irs-pdf/f5305ea.pdf
What Is IRS Form 5305-EA and a Coverdell Education Savings Custodial Account?
Form 5305-EA serves as a model custodial account agreement pre-approved by the IRS. It meets all requirements of IRC Section 530(b)(1) for a Coverdell ESA.
A Coverdell ESA is a custodial account (not a trust—use Form 5305-E for trust accounts) set up in the U.S. exclusively to pay qualified education expenses for a designated beneficiary. The depositor (usually a parent) opens the account, and a responsible individual (typically a parent or guardian) manages it.
Important: Do not file Form 5305-EA with the IRS. Keep the completed, signed form in your records. The custodian (bank, brokerage, or IRS-approved entity) holds the assets.
The form includes:
- Part I: The actual custodial account agreement (Articles I–X).
- Part II: General instructions, definitions, and notes.
Once signed by the depositor and custodian, the account is officially established.
Who Can Set Up a Coverdell ESA Using Form 5305-EA?
Eligibility rules (per IRS Publication 970 and Topic No. 310):
- The designated beneficiary must be under age 18 when the account is established (or any age if a special needs beneficiary—no age limits apply).
- The beneficiary must be a U.S. citizen or resident alien.
- Any individual (parent, grandparent, relative, friend, or even the beneficiary) or organization (corporation, trust) can contribute, subject to income limits for individuals.
- The custodian must be a bank, savings and loan association, or IRS-approved entity (same as for traditional IRAs).
Special needs beneficiaries enjoy waived age limits for contributions, distributions, and rollovers.
Key Features and Tax Benefits of Coverdell ESAs
Coverdell ESAs offer powerful advantages:
- Tax-free growth: Earnings compound without annual taxes.
- Tax-free qualified distributions: Withdrawals for qualified education expenses are entirely tax-free (no federal income tax or 10% penalty).
- Broad use: Covers K-12 and higher education (unlike pre-2018 restrictions).
- Flexibility: Multiple accounts per beneficiary are allowed (total contributions across all cannot exceed the annual limit).
- Rollover option: Tax-free rollover to another Coverdell ESA for the same beneficiary or a qualifying family member (spouse, child, sibling, parent, niece/nephew, first cousin, etc.) within 60 days (one per 12 months, with exceptions).
Qualified education expenses (detailed in Pub. 970, Chapter 6) include:
- K-12 (elementary/secondary): Tuition, fees (up to $10,000/year), books, supplies, equipment, academic tutoring, special needs services, computer technology/Internet (primarily educational), uniforms, transportation, extended day programs.
- Higher education: Tuition, fees, books, supplies, equipment, room and board (if at least half-time student), computers/software/Internet (primarily for the beneficiary during enrollment), special needs services, certification/licensure fees.
Expenses must be reduced by tax-free assistance (scholarships, Pell Grants, etc.) to determine the tax-free portion.
Distributions: Taxable earnings portion + 10% penalty applies if distributions exceed adjusted qualified expenses or are non-qualified (exceptions: death, disability, scholarship, military academy, etc.).
Funds must generally be distributed within 30 days after the beneficiary turns 30 (waived for special needs) or upon death (can roll to family member under 30).
Coverdell ESA Contribution Limits and Rules for 2026
- Annual limit: $2,000 total per beneficiary (across all Coverdell ESAs, excluding rollovers). No inflation adjustment.
- Deadline: Contributions for a tax year can be made until the due date of the beneficiary’s tax return (not including extensions)—typically April 15 of the following year.
- Cash only: Contributions must be in cash.
- Income phaseout for individual contributors (unchanged for 2025/2026):
- Single: Full $2,000 if MAGI < $95,000; phases out $95,000–$110,000; $0 if ≥ $110,000.
- Married filing jointly: Full $2,000 if MAGI < $190,000; phases out $190,000–$220,000; $0 if ≥ $220,000.
- Organizations (corporations, trusts) face no income limits.
- No earned income requirement for the contributor.
Excess contributions incur a 6% excise tax (Form 5329) unless withdrawn by June 1 of the following year.
How to Fill Out IRS Form 5305-EA: Step-by-Step Instructions?
- Gather information:
- Depositor’s name, address, SSN.
- Designated beneficiary’s name, address, date of birth, SSN.
- Responsible individual’s name/address (usually parent/guardian).
- Custodian’s name and address.
- Initial contribution amount (cash).
- Complete the top section:
- Enter names, addresses, dates of birth.
- Check “amendment” box if modifying an existing account.
- Initial contribution: Enter the dollar amount assigned.
- Sign the agreement:
- Depositor and custodian sign and date.
- Witness signature if required by state law or custodian.
- Article V option: Check the box if you want the responsible individual to continue after the beneficiary reaches the age of majority.
- Article X: Add any state-specific or additional provisions (must comply with IRC and state law). Draw a line through if unused.
- Responsible individual powers: The responsible individual directs investments and distributions after setup.
Pro tip: Work with your financial institution—they often provide a fillable version or pre-populated form that incorporates this model agreement.
After execution, the custodian handles investments per your directions and issues required IRS reports (e.g., Form 1099-Q for distributions).
Coverdell ESA vs. 529 College Savings Plan
| Feature | Coverdell ESA | 529 Plan |
|---|---|---|
| Annual Contribution Limit | $2,000 per beneficiary | Much higher (gift tax limits) |
| Income Limits | Yes (phaseout for individuals) | None |
| Qualified Expenses | K-12 + higher ed (broad) | Primarily higher ed (K-12 up to $10k) |
| Control | Responsible individual (often parent) | Account owner (can change beneficiary) |
| Age Limits | Must distribute by age 30 (special needs exception) | No age limit |
| Tax Benefits | Tax-free growth + qualified withdrawals | Same |
Coverdell ESAs excel for K-12 private school tuition, tutoring, or computers. 529 plans suit larger college savings.
Reporting and Common Mistakes to Avoid
- Custodian issues Form 1099-Q for distributions (available by Feb. 2).
- Report taxable portions on Form 1040.
- Track basis (contributions) vs. earnings carefully.
- Avoid: Contributing over limits, using for non-qualified expenses, missing the age-30 distribution deadline, or forgetting to coordinate with education credits.
Frequently Asked Questions (FAQs) About IRS Form 5305-EA
Can I contribute after the beneficiary turns 18?
No, unless they are a special needs beneficiary.
Is the initial contribution required?
The form allows any amount; many start small and add later (up to limits).
Can grandparents contribute?
Yes—multiple contributors allowed, as long as total ≤ $2,000.
What if the beneficiary doesn’t need the money by age 30?
Roll over to a family member’s Coverdell ESA or 529 (under specific rules) to avoid taxation.
Are there state tax benefits?
Varies by state—check your state’s rules.
Conclusion: Is a Coverdell ESA Right for Your Family?
IRS Form 5305-EA provides a simple, IRS-approved way to open a flexible, tax-advantaged Coverdell Education Savings Custodial Account. With its ability to cover K-12 through college expenses and tax-free growth, it remains a valuable tool in 2026 for families planning education costs—especially when combined with 529 plans.
Always verify the latest rules in IRS Publication 970 and consult a tax professional or financial advisor for your specific situation. Tax laws can change, and this article provides general information only—not personalized advice.
Start saving today: Download Form 5305-EA, contact your custodian, and secure your child’s educational future with tax-free growth.
Sources: IRS Form 5305-EA (Rev. Oct. 2016), Publication 970 (2025), Topic No. 310 (all accessed February 2026).