Coverdell Education Savings Account

$2,000 a year per beneficiary for education, subject to income limits.

Retirement Plans, Accounts & Trading Series 65 · Section 3

What is Coverdell Education Savings Account?

Total contributions for any one beneficiary cannot exceed $2,000 a year, contributors must be under income limits, and contributions generally stop at 18. Growth and qualified withdrawals are tax-free and can cover K-12 as well as college costs. Assets must generally be used by age 30 or rolled to another family member.

Coverdell Education Savings Account: a worked example

Two grandparents each wanting to put $2,000 into one grandchild's Coverdell cannot - the $2,000 cap is per beneficiary.

What is the difference between Coverdell Education Savings Account and 529 Plan?

Coverdell: $2,000 a year cap, income limits, age limits. 529: very high contribution limits, no income limits, state-sponsored.

Often confused with 529 Plan - see Coverdell Education Savings Account vs 529 Plan side by side.

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