Coverdell Education Savings Accounts (ESA)

An Education IRA (individual retirement account), now called Coverdell Education Savings Accounts, is a custodial savings account that is set up to pay the qualified education expenses of a designated beneficiary (Minor child).

Coverdell ESA contributions are not tax deductible. But withdrawals to pay qualified expenses are tax-free.

Qualified expenses include tuition, fees, books, elementary and secondary school expenses, computer technology or equipment--even online access--that the beneficiary uses while in school, and equipment required for enrollment or attendance at nearly any postsecondary educational institution. Certain room and board expenses also may qualify.

Your total contributions for a beneficiary cannot exceed $2000.00 a year. All contributions must be made in cash and must be made by the due date of the contributor’s tax return (not excluding extensions).

You can contribute to a Coverdell Account until the child reaches age 18. Children have up until age 30 to use the funds.