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How Can I Use the Money From My Coverdell ESA?

Coverdell ESA accounts can be used to cover educational expenses. Similarly to a 529 Plan, the money from a Coverdell ESA can only be used for qualified educational expenses.

However, the definitions for “qualified” are broader with this plan, and can be used for educational expenses from Kindergarten through high school, in addition to postsecondary (college) expenses. The downside is that Coverdell’s have a low contribution limit of only $2,000 per year.

The funds have to be used by the time the beneficiary reaches 30 years old, or the account can be transferred to a new family member beneficiary. Note that if your AGI is too high you may not be able to contribute to one, but you can still have a 529 plan.

What are the Contribution Limits For My Coverdell ESA?
How do I allocate my assets in retirement?

Keywords: educational expenses, Coverdell ESA, saving for college, 529 Plan,