1. Coverdell Education Savings Account: Introduction
  2. Coverdell Education Savings Account: Who’s Eligible to Contribute?
  3. Coverdell Education Savings Account: Opening an ESA
  4. Coverdell Education Savings Account: Avoiding Taxes on Distributions
  5. Coverdell Education Savings Account vs. 529 Plan
  6. Coverdell Education Savings Account: Conclusion

A Coverdell Education Savings Account can be a helpful way to save for current and future education expenses. But, it’s not your only option. To recap, here are the most important highlights to keep in mind as you explore college savings opportunities:

  • Anyone who meets the income limitations can contribute to a Coverdell ESA on behalf of a child younger than 18.
  • The maximum annual contribution per ESA, per beneficiary is limited to $2,000.
  • Your eligibility to contribute depends on your filing status and modified adjusted gross income.
  • Your contribution amount may be reduced, depending on your MAGI.
  • Excess contributions, distributions for non-qualified education expenses and distributions beyond age 30 can all trigger tax penalties.
  • A 529 plan may offer more flexibility in saving for college, but won't help you pay for K-12 education costs.

For further reading, check out How Expanded Kiddie Tax Affects FamiliesHow and When to Switch Your 529 PlanFiling Your Child's First Income Tax Return and our Student Loans Tutorial.

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