Coverdell Education Savings Accounts

These education accounts can include up to a $2,000 contribution yearly (non deductible) per beneficiary. The accounts can be used for K-12 expenses as well as post high school, and all withdrawals are tax free–both the contribution amounts and the earnings as long as withdrawls are less than or equal to education expenses. These expenses can include tuition and fees, required books, supplies and equipment and qualified expenses for room and board. The child/young adult has until age 30 to use the money. Then the remaining funds must be withdrawn (taxable and with a 10% penalty) or rolled over into another person’s name. This could be a potential way to create an education legacy fund for your family.

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