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Coverdell Education Savings Account Review
A Coverdell Education Savings Account was originally called an 'Education IRA', and it may be created for the purpose of paying qualified education expenses of your children. There are limits to the amount that you can put away each year, which also depends on how much income and money you make each year.
A Coverdell Education Savings Account (ESA) is an incentive account created to help parents and students save for college and education expenses. The amount of money that you are allowed to save each year is limited to total contributions of no more than $2,000 in each year, no matter how many accounts have been established.
Coverdell ESA providers
A Coverdell Education Savings Account helps you save for your child's education by offering federal tax-free earnings and withdrawals for qualified expenses such as tuition, books, computers and room and board. There is no minimum required annual contribution, and you may contribute as much as $2,000 per child per year if you meet the income requirements.
You can start investing for your child from birth.
How to Pay for Your Childrens College
The money or contributions you make to a Coverdell ESA are not tax deductible, but the money amounts deposited in the account do grow tax free until distributed. The beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution. This favored benefit applies to qualified higher learning and education expenses as well as to qualified elementary and secondary education expenses.
Any balance remaining in an Education Savings Account at the time your child becomes 30 years old must be distributed, certain limitations and exceptions apply.
For more information on Coverdell Education Savings Accounts see www.irs.gov.
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