It's not only an education. It's their future!
The Coverdell Education Savings Account, or Education IRA, is a flexible account designed to offset growing educational expenses. If your child is under 18 years, everyone can contribute to the account. Share this account
with grandparents, aunts, uncles, and other family members. A Coverdell Education Savings Account (ESA) is the perfect tool for saving money to pay for a child’s educational expenses – from kindergarten through college. A Coverdell ESA provides tax-free safe place to grow competitive dividends and also financial confidence for a new stage in life.
Though contributions to a Coverdell ESA aren't deductible, the amounts in the account grow tax free.
Distributions are tax free as long as they are used for qualified educational expenses such as:
- Tuition and Fees
- Books for class
- Room and Board
Not only can distributions be used for higher education, it can also be used for qualified elementary and secondary schools.
Key points to keep in mind
- $2,000 maximum annual contribution per child (up to age 18)
- Students can use money any time before age 30
As always, it is best to consult with your tax advisor to determine which IRA or ESA option is best for you.
Funds are NCUA Federally Insured up to $250,000