The Coverdell ESA is an Education Saving Account, established by a Custodian (usually the parent or grandparent) for the benefit of a minor, to pay for educational related expenses.
Contributions are NOT tax-deductible and may not exceed $2000 per year.
The account may hold Stocks, Bonds, Mutual Funds, or ETFs and the earnings in the account grow tax-free.
Withdrawals and Distributions are tax-free if used for education costs which may include: tuition, books, room & board, uniforms, computers, and transportation.
The account may be used for covering Elementary, Secondary, College, and Post-Graduate expenses.
The funds in the Coverdell ESA do not affect the Beneficiary's ability to qualify for financial aid.
When the Beneficiary turns 30 years old any remaining funds must be disbursed and taxed; however, taxes and penalties can be avoided by rolling the remaining balance to a new beneficiary -- family member or relative.
Max income to participate (single): $110,000 / Max income (married): $220,000.
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