Coverdell Education Savings Account

A Coverdell Education Savings Account or simply Coverdell ESA is a savings account that can be set up to pay for qualifying educational expenses of a designated beneficiary.  A Coverdell ESA can be set up for anyone under the age of 18 or is designated a special needs beneficiary.

Contributions to a Coverdell Education Savings Account are not tax deductible and the earnings are allowed to grow tax fee until distributed. Distributions from a Coverdell are tax free as long as they do not exceed the beneficiary's adjusted qualified educational expenses.  Generally, contributions can be made to a Coverdell as long as your Adjusted Gross Income or AGI is less than $110,000 for individual filers, $220,000 for those filing joint returns.

In 2006 and 2007, the contribution limits for a Coverdell ESA are $2,000 per beneficiary.

Other forms of this term include -Coverdell ESA