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 Contributions are not tax-deductible, but earnings grow tax-deferred until withdrawn. Money withdrawn prior to the child turning age 30 to pay for elementary, secondary, or postsecondary education expenses after high school is not subject to federal income tax.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.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Mentioned in

References in periodicals archive

The Tax Relief Act of 2001 increases the annual contribution limit and expands the definition of qualified education expenses for the Coverdell Education Savings Account. Beginning in year 2002, individual taxpayers will now have an opportunity to save for the cost of not only qualified higher education expenses but also qualified elementary and secondary school expenses.--Stacy A.

Coverdell education savings accounts and the tax relief act of 2001. (Taxes)

The Uniform Gifts to Minors Act (UGMA), The Uniform Transfers to Minors Act (UTMA) Accounts, and Coverdell Education Savings Accounts (formerly known as Education IRAs) are just some of the traditional ways to fund college.

529 plans make college funding easier

Joe Knollenberg, R-Mich., introduced the Student Financial Readiness Act of 2007, which would increase the maximum annual contribution to Coverdell Education Savings Accounts from $2,000 to $5,000 and allow for annual inflation adjustments.

Congress moves to fulfill promises on higher education

Aimed at attorneys, accountants, financial planners, and insurance advisors, this resource provides comprehensive coverage of all types of IRAs and Coverdell Education Savings Accounts. The 12th edition incorporates congressional and administrate agency actions, including the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and the Supreme Court's decision in Rousey v.

Individual retirement account answer book, 12th ed

Annual contributions to Coverdell Education Savings Accounts (ESAs, formerly called education IRAs) are limited to $2,000 per year per beneficiary.

Save for college in tax-advantaged accounts

Most students will have to borrow some funds for college, but they and their families can reduce that amount through planned, and often tax-deferred, college savings accounts, including 529 plans and Coverdell Education Savings accounts (ESAs, formerly education IRAs).

529 plans offer benefits for college savers: the University of Alaska College Savings Plan is a 529 plan that delivers a full spectrum of exceptional benefits--whether your child chooses to attend a UA campus or almost any other college, university or technical school in the United States

[section]222.22 to exempt from legal process all qualified tuition programs authorized by ??529 of the Internal Revenue Code and all Coverdell Education Savings Accounts.

RPPTL section takes a number of legislative positions

Refunds can fund several kinds of accounts, including checking, savings, individual development accounts, IRAs (traditional, Roth and SEP), health savings accounts, Archer MSAs, and Coverdell education savings accounts.

Using refund splitting to fund IRAs

The deduction for interest on student loans should save taxpayers about $1 billion a year, while earnings in Coverdell Education Savings Accounts should range between $100 million and $200 million.

Congress Stalls On legislation for education

Coverdell Education Savings Accounts: Formally referred to as Educational IRAs, these allow users to contribute cumulatively up to $2,000 a year for qualified elementary, secondary school and higher education expenses of a child.

School savings plans: prepayment option can avoid gift tax--but beware