Coverdell Education Savings Account

A Coverdell Education Savings Account (ESA) was created in 1997 by Congress exclusively to help pay qualified education expensed for the benefit of your child. The funds can be used for higher education as well as elementary and secondary school education expenses. A Coverdell ESA may be established for the benefit of any child under the age of 18: after the child reaches the age of 18, contributions are no longer accepted (the age limitation is waived for a special needs beneficiary).

 

Through a Coverdell Education savings Account:
 

• No more that $2,000 may be contributed annually from all sources on behalf of a beneficiary. regardless of the number of accounts used.
  
  
• Account earnings grow tax-deferred and distributions are exempt from federal taxes when used to pay qualified education expenses of the beneficiary
  
  
• Contribution eligibility is based on an adjusted gross income limit of $95,000 to $110,000 for singles, or $190,000 to $220,000 for married couples filing joint tax returns.
  
  
• If funds are unused. you can change the beneficiary to another qualifying family member.
  
  
• You can contribute to a 529 college savings plan at the same time.