What are Coverdell Education Savings Accounts?
Coverdell Education Savings Accounts, formerly called Education IRAs, were created in 1997 and work much like individual retirement accounts, except they are intended for college savings instead of retirement savings. Coverdell accounts are set up for a designated beneficiary and contributions are added to it over the years. Account owners can invest the money in whatever mix of stocks, bonds, cash or mutual funds they choose, just as they could with an IRA. When the designated beneficiary needs the funds for school, distributions can be taken from the Coverdell account to cover qualified education expenses.
