You can contribute to both, and when your child is ready to attend college, as colleges do accept payments from both. There are some features and benefits that may make one account more favorable than the other.

For instance, the Coverdell education savings account (formerly Education IRA) may be used for education costs for private school, kindergarten through grade 12, and for higher education. The 529 plan assets may be used for higher education expenses only.

(For further reading on this topic, see Choosing The Right Type Of 529 Plan, Investing In Your Child's Education and Don't Forget The Kids: Save For Their Education And Retirement.)

This question was answered by Denise Appleby
Contact Denise)

  1. What are the risks involved in a banker's acceptance?

    Learn about the different kinds of college savings accounts, how they can benefit a college saver and how to open these savings ... Read Answer >>
  2. A parent would choose to set up a Coverdell Education Savings Account for a child ...

    A parent would choose to set up a Coverdell Education Savings Account for a child in order to save for college expenses AND: ... Read Answer >>
  3. What is the best way to save for private school expenses? A 529 plan, a Coverdell ...

    If the goal is to put the money in the plan towards private school expenses, then the Coverdell Education Savings Account ... Read Answer >>
Related Articles
  1. Taxes

    Tax-Smart Ways To Help Your Kids/Grandkids Pay For College

    Learn about plans and accounts that allow you to efficiently save for your child or grandchild’s education while shielding the savings from the IRS as much as possible.
  2. Managing Wealth

    Education Savings Account Tutorial

    This comprehensive guide goes through what an Education Savings Plan is and how to set one up, contribute to it and withdraw from it.
  3. Taxes

    Clearing Up Tax Confusion For College Savings Accounts

    Put your kids through school without being hounded by the tax man.
  4. Personal Finance

    529 Plans: Your Most Pressing Questions Answered

    When parents start preparing for college costs, here are the most commonly asked questions about 529 plans.
  5. Financial Advisor

    Which Gets Priority: Retirement or College Fund?

    On a tight budget? Wondering which to contribute to – your retirement or your kid's college fund? Here's expert help on how best to allocate your savings.
  6. Financial Advisor

    Advising FAs: Explaining College Savings Accounts to Clients

    There are several types of savings accounts designed for higher education available today. The right one for you will depend upon factors such as your tax bracket, time horizon, investment objectives ...
  7. Personal Finance

    Paying For College In An Economic Downturn

    There are many ways to fund a child's education including loans, scholarships, grants and protecting your investments.
  8. Personal Finance

    Stop Procrastinating! Enroll In A College Savings Plan

    The cost of sending your kids to college could be a serious financial burden - unless you get prepared. Now.
  9. Financial Advisor

    Should Parents Save Towards College or Retirement?

    Many parents are unsure about whether to save more for retirement or education for their kids. These general guidelines that may make that decision easier.
  1. Education Credit

    A type of tax credit available to students of a post-secondary ...
  2. Registered Education Savings Plan - RESP

    A savings plan sponsored by the Canadian government that encourages ...
  3. Non-Qualified Distribution

    1) A distribution from a Roth IRA that occurs before the Roth ...
  4. Canada Education Savings Grant - CESG

    A grant from the Government of Canada paid directly into a beneficiary's ...
  5. The National Association of College and University Business Officers - NACUBO

    An organization dedicated to furthering the interests of professionals ...
  6. Cost Of Attendance

    A figure provided by colleges and/or college financial offices ...
Hot Definitions
  1. Assets Under Management - AUM

    The market value of assets that an investment company manages on behalf of investors. Assets under management (AUM) is looked ...
  2. Subprime Auto Loan

    A type of auto loan approved for people with substandard credit scores or limited credit histories. There is no official ...
  3. Racketeering

    A fraudulent service built to serve a problem that wouldn't otherwise exist without the influence of the enterprise offering ...
  4. Federal Debt

    The total amount of money that the United States federal government owes to creditors. The government's creditors include ...
  5. Passive Management

    A style of management associated with mutual and exchange-traded funds (ETF) where a fund's portfolio mirrors a market index. ...
  6. Series 7

    A general securities registered representative license administered by the Financial Industry Regulatory Authority (FINRA) ...
Trading Center