In 2002, the Education IRA was renamed the Coverdell Education Savings Account.
These accounts work very much like a 529 plan, offering tax-free investment growth and tax-free withdrawals when the funds are spent on qualified education expenses. However, in addition to college expenses, certain K-12 purchases are also considered qualified when using a Coverdell ESA.
However, tax-free withdrawals from 529 plans are limited to $10,000 in tuition expenses for K-12 schools, but when using a Coverdell ESA, qualified elementary and secondary education expenses also include books, supplies, equipment, academic tutoring and special needs services in connection with enrollment or attendance at an eligible school.
Also, Coverdell ESAs have much lower maximum contribution limits per child, and they are only available to families below a specified income level. Learn more about Coverdell ESAs using the links below.
A thorough explanation of one of the least-understood investment vehicles around, the Coverdell Education Savings Account.
We have assembled this list of low-cost Coverdell Education Savings Accounts (ESA).
Read about what benefits Coverdell education savings accounts have to offer and how they compare to 529 college savings plans.
Compare the features of a Coverdell education savings account with other college savings options side by side: You can modify your comparison by selecting which options to look at, and what features you'd like to compare.
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