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The Coverdell Education Savings
Account's sole purpose is to allow parents,
grandparents, and other interested persons to set up to $2,000 aside each
year to help pay the higher- education expenses of the child named on the
account. The account is set up and reported under the child’s Social
Security number. Earnings accumulate tax-free and withdrawals are
tax-free if used for vocational, undergraduate, or graduate education
expenses by the time the person is 30 years of age.
Each child can only have an aggregate of $2,000 contributed in his or her
name. Therefore, if both parents choose to contribute to an Coverdell
ESA, the total of their contributions cannot exceed $2,000. If the funds
in the Coverdell ESA are not used by the child, the Coverdell ESA may be
rolled-over to another child’s Coverdell ESA within the same family.
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