What is a Coverdell Education Savings Account (Coverdell ESA)?
A Coverdell Education Savings Account (Coverdell ESA) is an account established to pay qualified education expenses for the designated beneficiary (owner of the account).
- Contributions are limited to $2,000 per child annually and can only be made for designated beneficiaries under age 18, unless they have special needs.
- Withdrawals are tax-free if used for eligible elementary, secondary, or college expenses, including tuition, books, tutoring, and computers.
- Funds must be used before the designated beneficiary turns 30, unless the individual has special needs.
- A Coverdell ESA is opened under the child’s membership, with a parent or legal guardian acting as the responsible individual.
- For additional information and a complete list of eligible expenses, refer to IRS Publication 970.
