Coverdell ESAs

Coverdell Education Savings Plans

In 2002, the Education IRA was renamed as Coverdell Education Savings Account.  These accounts work very much like a 529 plan, offering tax-free investment growth and tax-free withdrawals when the funds are spent on qualified education expenses. However, in addition to college expenses, certain K-12 purchases are also considered qualified when using a Coverdell ESA.  However, tax-free withdrawals from 529 plans are limited to $10,000 in tuition expenses for K-12 schools, but when using a Coverdell ESA, qualified elementary and secondary education expenses also include books, supplies, equipment, academic tutoring, and special needs services in connection with enrollment or attendance at an eligible school.

Prepare for your child's future with Focus FCU

Become a Member