What is the Coverdell Education Savings Account?
The Coverdell Education Savings Account (ESA) helps parents and students save for education. It can be used to pay for a student’s post-secondary or K-12 education expenses. Contributions to a Coverdell ESA are limited to $2,000 per year for taxpayers with a modified adjusted gross income (MAGI) of less than $110,000 ($220,000 if filing a joint return). Coverdell ESA deposits grow tax free until distributed. However, the beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution.
