Unlike Traditional and Roth IRAs, which were designed with retirement in mind, the Coverdell Education Savings Account was created to help investors pay for their children's college educations.
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A smart college planning tool.
Coverdell Education Savings Accounts allow parents, grandparents or family friends to set aside $2000 per year for a child's college education, provided the child is under the age of 18 and there are no contributions being made on behalf of the child to a qualified state tuition program.
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Coverdell Education Savings Account contributions are nondeductible and income limitations apply. |
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Once invested, assets and earnings compound tax-deferred. |
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Withdrawals made to pay for qualified education expenses are tax-free. |
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Qualifying expenses include tuition, room, board, books, supplies, and certain types of travel. |
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Coverdell Education Savings Accounts can be used to pay for elementary and secondary school tuition, including private schools. |
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Consult a financial professional.
For additional information about Coverdell Education Savings Accounts, make an appointment with a financial professional today. |
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The money in a Coverdell Education Savings Account must be spent or paid to the student by his or her 30th birthday (or older with special needs within the meaning of Internal Revenue Code Section 529(e)(2)), or else rolled into a new Coverdell Education Savings Account for a family member.
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| Withdrawals of earnings that exceed the student's qualified higher education expenses may be subject to income taxes and an additional 10% tax. |
