Coverdell ESA

WHO CAN CONTRIBUTE?

  • Anyone who has MAGI
    1. Single filer: up to $95,000
    2. Joint income for filers: up to $190,000
  • Some people with higher MAGi may be able to make smaller contributions
  • Contributions not allowed after the beneficiary reaches age 18 (except for special-needs beneficiaries)

HOW MUCH CAN I CONTRIBUTE?

  • $2,000 per child
  • Limit applies to all Coverdell Education Savings Accounts (ESA) for the same child

WHO CAN MAKE DEDUCTIBLE CONTRIBUTIONS?

  • No one can deduct contributions

WHAT ARE THE TAX ADVANTAGES?

  • Withdrawals for certain qualified education expenses are tax-free.
  • Special-needs beneficiaries can withdraw funds tax-free to pay for qualified education expensed at any age.
  • Qualified education expenses may include tuituion, fees, books, computer equipment and technology required for emementary, secondary, and post-secondary education
  • A beneficiary may recieve tax-free distrubutions from a Coverdell ESA in the same year he or she claims the Lifetime Learning or HOPE Scholarship tax credits

CAN I WITHDRAW FROM THE ACCOUNT?

  • Withdrawls are tax- and penalty-free withdrawals only for qualified expenses (earnings are subject to tax and penalty for most other withdrawls).
  • Funds can be transferred from one child's account to an account for another child in the family