How Do You Open A Coverdell Educational Savings Account?
A Coverdell Educational Savings Account (ESA) can help you save money for educational expenses. You may deposit up to $2,000 a year per contributor and per beneficiary; but only people within certain income limits can use this method. Check IRS Publication 970 for current details. Any growth within the account is tax-deferred and nontaxable upon distribution, if used for a qualified educational expense. The government has a list of what counts as educational expenses and what doesn’t. You can use this for college, for a private elementary or secondary school, and usually vocational school. Coverdells come in many forms. It’s important to understand what each one is before you open a Coverdell savings account. Coverdells are available through banks, mutual funds, and some brokerage houses. To decide which one to use, first determine your investment risk tolerance. If you don’t want to expose yourself to too much risk, then choose to open a Coverdell through an Federal Deposit Insurance
