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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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 Contributions are not tax-deductible, but earnings grow tax-deferred until withdrawn. Money withdrawn prior to the child turning age 30 to pay for elementary, secondary, or postsecondary education expenses after high school is not subject to federal income tax.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.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
Public education advocates did an about-face on the bill once they saw it included education savings accounts, with about 40 organizations sending letters to all Senate offices asking them to vote against it.
(23.) See DAN LIPS, GOLDWATER INST., EDUCATION SAVINGS ACCOUNTS: A VEHICLE FOR SCHOOL CHOICE 2, 4 (2005), https://www.heartland.org/ sites/all/modules/custom/heartland_migration/files/pdfs/19148.pdf [https://perma.cc/L7P8-CB34]; JONATHAN BUTCHER & LINDSEY M.
In Arizona, beginning next fall [fall 2014], these education savings accounts grants will be worth about $6500 per child.
In addition, there is also the lesser used Coverdell Education Savings Accounts and Uniform Gift to Minors Act (UGMA) Custodial Accounts.
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.
The report can also link to other credit union products like special education savings accounts and home equity loans.
* Gifts to Education Savings Accounts (ESAs) Q 1527
(1) Coverdell Education Savings Accounts allow income tax-free distribution of earnings to pay a beneficiary's qualified education expenses--pages 315-316.
The tax would be refunded for transactions in tax-favored retirement accounts, mutual funds, education savings accounts and health savings accounts.
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