07/15/2015

COVERDELL EDUCATION SAVINGS ACCOUNT (ESA)

Investment vehicle designed to help parents or others fund a child’s education. Contributions aren’t tax deductible, but distributions for qualified educational expenses aren’t taxable. Generally, transferable among family members. Several restrictions: Entire account must be disbursed by the beneficiary’s 30th birthday; withdrawals after this date or for expenses that are not qualified education expenses are subject to federal income taxes and a tax penalty.

Contributor: Cara Ross