Who are eligible beneficiaries of a Coverdell?
Students who are under 18 years old qualify as beneficiaries for a Coverdell ESA. What can a Coverdell ESA do for me that a 529 plan cannot? The big plus we see in Coverdell is that the funds may be used tax-free to pay for qualified K-12 educational expenses as well as higher education costs. 529 plan funds cannot be used for this purpose without penalty. Coverdells also give you a wide variety of investments options to choose from unlike 529 plans, where you are limited to the options offered by the plan manager. Typically, mutual fund companies offering Coverdells let investors pick the funds and create a portfolio for themselves. This can be beneficial if investors can enroll directly into a Coverdell account (i.e. without the need of a financial advisor), as investors do not need to pay high sales fees – that mainly go towards compensating a financial advisors – and they have a wide variety of investment options to choose from. Are there contribution limits to Coverdells?
