What is an Coverdell Education Savings Account – Section 530 Program (formerly Education IRA) and who is eligible for one?
You can contribute up to $2,000 each year of 2009 and 2008 to a Coverdell education savings account (Section 530 program) for a child under 18. These contributions are not deductible, but they grow tax-free until withdrawn. Contributions for any year (say 2008) can be made through the (un extended) due date for the return for that year (April 15, 2009). Note: For the $2,000 contribution limit, there is no adjustment for inflation and therefore, the limit is expected to remain at $2,000 for 2010 and beyond. Only cash can be contributed to a Section 530 account and you cannot contribute to the account after the child reaches his or her 18th birthday. Anyone can establish and contribute to a Section 530 account, including the child, as long as the contributor’s modified AGI doesn’t exceed $220,000 for a joint return or $110,000 for a single filer. You may establish 530s for as many children as you wish, and the child need not be a dependent – in fact, he or she need not be related to you.
Related Questions
- What is an Coverdell Education Savings Account - Section 530 Program (formerly Education IRA) and who is eligible for one?
- Can I convert a Coverdell Education Savings Account (formerly the Education IRA) into a College Savings Program?
- How does the Bright StartSM College Savings Program differ from a Coverdell Education Savings Account?
