How does a Coverdell Education Savings Account (formerly an Education IRA) compare with the NC 529 Plan?
There are many benefits to the NC 529 Plan. For example, Coverdell Education Savings contributions are limited to $2,000 per year until the child reaches age 18. With the NC 529 Plan, maximum allowable contributions are not limited by year but by total Account balance per Beneficiary – which means you can save as much as you want each year (subject to applicable gift tax) until total funds for the Beneficiary reach the maximum total allowable. With a Coverdell Education Savings Account, funds may be treated as the student’s assets for purposes of eligibility for student financial assistance. There’s no danger of that kind of transfer of “ownership” from Participant to Beneficiary with the NC 529 Plan. The Participant – the person who sets up the Account – always controls, or “owns,” the funds.
Related Questions
- How does the Texas College Savings Plan differ from a Coverdell Education Savings Account (formerly known as an Education IRA)?
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- How does a Coverdell Education Savings Account (formerly an Education IRA) compare with the NC 529 Plan?
