Coverdell Education Savings Account

In 1997, Congress passed the Taxpayer Relief Act providing for a new type of savings program called the Coverdell Education Savings Account (formerly known as the Education IRA ). A Coverdell Education Savings Account is not actually a retirement plan; it is a trust that is created to help pay the qualified education expenses of the designated beneficiary of the account. The Coverdell Education Savings Account provides a unique savings vehicle where distributions of contributions and earnings are potentially tax-free if used to pay for certain qualified education expenses.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) has increased the amount that individuals can contribute to a Coverdell Savings Education Account. To find out how much can be contributed, visit our plan limits page. To find out more about changes brought on by EGTRRA, visit our EGTRRA page.

For more information about Coverdell Education Savings Accounts and other retirement plans, visit our Frequently Asked Questions.