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). Funds can be withdrawn tax-free for college expenses, as well as qualified education expenses for elementary and secondary education. Qualified education expenses include, but are not limited to, tutoring, tuition, books and home computers. The annual contribution limit for a Coverdell ESA is $2000.00 per year, per child. The beneficiary must be under the age of 18 to receive contributions to the Coverdell ESA, unless the child has special needs. Funds in the Coverdell ESA must be used by the time the individual has reached age 30, unless the individual has special needs. A Coverdell ESA is opened under the child’s own membership, and must have a parent or legal guardian listed as the responsible individual on the account. Refer to IRS Publication 970 for additional information regarding Coverdell ESAs, including a complete list of qualified education expenses.