How does a Coverdell ESA differ from a 529 plan?

Coverdell ESA: $2,000/year limit, income phase-out for contributions, can be used for K-12 and college, more investment flexibility. 529: no income limit, higher contribution limits, only limited K-12 use ($10,000/year), state tax deduction often available.

Who can contribute to a Coverdell ESA?

Anyone with MAGI under $95,000 (single) or $190,000 (MFJ) can contribute the full $2,000. Phase-out ends at $110,000 (single) and $220,000 (MFJ). Corporations and trusts can contribute without income limitations.

What happens if Coverdell funds are not used by age 30?

ESA funds must be distributed by age 30. Non-qualified distributions are subject to ordinary income tax plus 10% penalty on earnings. The account can be rolled to a family member under age 30 to avoid this.

US Coverdell Education Savings Account (ESA) Calculator

Calculate Coverdell ESA benefits: $2,000/year contribution (income-limited), tax-free growth, tax-free withdrawals for K-12 and higher education. Contribution phase-out: $95,000-$110,000 (single), $190,000-$220,000 (MFJ).

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US Coverdell Education Savings Account (ESA) Calculator

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Frequently Asked Questions

How does a Coverdell ESA differ from a 529 plan?

Who can contribute to a Coverdell ESA?

What happens if Coverdell funds are not used by age 30?