Coverdell Education Savings Account


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Coverdell Education Savings Account

An account into which one may deposit funds on a tax-deferred basis, on the assumption that they will be used to pay for the education of the account holder. The funds are invested in a portfolio, much like an IRA or another retirement account. If the funds are in fact used for education, withdrawals from a Coverdell account are tax-exempt up to the total cost of education. Importantly, any tax liability on a Coverdell account is assessed at the account holder's bracket, rather than the contributor's. This protects the account holder from an excessive tax liability in the event a wealthy parent made most or all of the contributions. It was formerly called an education IRA.

Coverdell Education Savings Account

A special individual retirement account opened on behalf of a child under age 18. Contributions of up to $2,000 annually may be made by anyone who meets specified income limits. Contributions are not tax-deductible, but earnings grow tax-deferred until withdrawn. Money withdrawn prior to the child turning age 30 to pay for elementary, secondary, or postsecondary education expenses after high school is not subject to federal income tax. Formerly called Education IRA.

Coverdell Education Savings Account (ESA)

A tax-favored savings plan under which any number of taxpayers may contribute up to a total of $2,000 per year per eligible beneficiary. Contributions are nondeductible. Earnings withdrawals are tax free and penalty free if they do not exceed the amount of qualified education expenses for the year.
References in periodicals archive ?
150) Unlike Coverdell Education Savings Accounts, there are no statutory age restrictions on the designated beneficiary of a QTP.
Example 2: A couple filing "married filing jointly" with an adjusted gross income of $205,000 would get tax-free treatment on a contribution to a Coverdell Education Savings Account on one half of the $2,000.
22) An Act to Amend the Internal Revenue Code of 1986 to Rename the Education Individual Retirement Accounts as Coverdell Education Savings Accounts, P.
com recommends investing in tax-deferred 529 college savings plan or Coverdell Education Savings Accounts as a way for future college students to avoid the kiddie tax altogether.
Previously, the tax benefits of 529's were to expire after 2010 8) Coverdell ESA -- A Coverdell Education Savings Account (ESA) is a savings account that is created in trust for minors -- Contributions are not deductible, but interest grows tax-free and qualified withdrawals are also tax-free -- Multiple family members can create a Coverdell ESA for the same student; however, each cannot contribute more than $2,000 each year -- The Pension Act does not pertain to Coverdell education savings accounts, which will still face a 2010 sunset of tax benefits
An account can be a checking, savings or other account, such as an individual retirement account (IRA), health savings account (HSA), Coverdell education savings account, or other types of accounts.
6) Don't count out the ESA -- Think a Coverdell Education Savings Account (ESA) is too limited?
If your retirement plan is funded for the year, consider investing in a college savings plan, such as a state-sponsored 529 plan or Coverdell Education Savings Account.
Contributions now can be made to both a 529 plan and a Coverdell Education Savings Account in the same year for the same beneficiary*
Rowe Price Coverdell Education Savings Account (ESA) -- an account designed to help students and their families pay for qualified education expenses, such as tuition, room and board, fees, and even books and supplies from elementary school through graduate school.
Taxpayers may consider contributing to a Section 529 plan or a Coverdell Education Savings Account (ESA).
Taxpayers with children or grandchildren may want to contribute to a Section 529 plan or a Coverdell Education Savings Account (ESA).