529 plans, education savings bonds and Coverdell education savings accounts
Anyone with a modified adjusted gross income less than $220,000 (married filing jointly) may contribute up to $2,000 per year to any person under the age of 18 (beneficiary) via a Coverdell Education Savings Account
(ESA, formerly called an Education IRA).
In addition to the traditional savings techniques discussed above, Congress has recently introduced tax incentives to promote education savings, including prepaid tuition and education investment plans commonly referred to as 529 Plans (after Section 529 of the Internal Revenue Code which governs them), Coverdell Education Savings Accounts
(formerly called Education IRAs), Hope Scholarships, and Lifetime Learning Credits.
Coverdell Education Savings Accounts
(ESAs), formerly educational IRAs, are another savings vehicle with increased flexibility although age and income limits do apply.
The contribution amount to a Coverdell Education Savings Account
is limited by a taxpayer's adjusted gross income (AGI).
The Coverdell education savings account
(CESA), formerly known as the education IRA, (22) is found under Sec.
A 529 college savings plan and/or a Coverdell Education Savings Account
, if you qualify; are the answers.
At this point, clients who need to save for future higher education costs should contribute to a 529 plan, even if the contribution provides no state income tax savings, and/or to a Coverdell education savings account
Her Education Savings for Students Act would increase Coverdell Education Savings Account
maximum annual contributions from $2,000 to $5,000.
For parents with small children, saving now using a plan such as a 529 College Savings Plan or Coverdell Education Savings Account
can help them prepare for when the child becomes a college-bound teenager.
You should look to contribute to both a 529 college savings plan and a Coverdell education savings account
After parents and teens have assessed their financial status and anticipated their impending needs, the next step is to compare the features of different education savings choices, such as a 529 College Savings Plan, custodial account, or Coverdell Education Savings Account
, to determine which may be the best fit.