Coverdell Education Savings Account (ESA)

A Coverdell Education Savings Account (ESA)* is an account created as an incentive to help parents and students save for education expenses.

The total contributions for the beneficiary of this account cannot be more than $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is under age 18 or is a special-needs beneficiary.

Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. The beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution. This benefit applies to higher education expenses as well as to elementary and secondary education expenses.

Click here to view the IRS - Coverdell Education Savings Account (ESA)

Click here to view the IRS - Coverdell Education Savings Account Tax Tip