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What are some features of Coverdell Education Savings Accounts?

April 26, 2017Coverdell Education features savings accounts

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What are some features of Coverdell Education Savings Accounts?

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Coverdell Education Savings Accounts have been offering tax-free withdrawals for higher education since 1998. Unlike 529 savings plans, withdrawals can be used for elementary and secondary education and even for academic tutoring and education-related computer expenses. There are income restrictions though. If your income exceeds certain limits, you will not be eligible to contribute to a Coverdell account. Annual contributions are also limited to $2,000 a year.

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Coverdell Education Savings Accounts have been offering tax-free withdrawals for higher education since 1998. Unlike 529 savings plans, withdrawals can be used for elementary and secondary education and even for academic tutoring and education-related computer expenses. There are income restrictions though. If your modified adjusted gross income (MAGI) is less than $110,000 ($220,000 if filing a joint return), you will be eligible to contribute to a Coverdell account. Annual contributions are also limited to $2,000 a year.