Coverdell ESA

The Coverdell Educational Savings Account (ESA), formerly the Education IRA, is an account that helps individuals save for the cost of elementary, high school or higher education. Generally, an individual can establish a Coverdell ESA for a child who is under age 18.

Contributions to a Coverdell ESA are not deductible. Amounts in the ESA grow tax-free until they are distributed. No tax is due on distributions if the beneficiary had qualified education expenses that were at least as much as the distributions during the year.

	Ask taxpayers to specify exactly what they are using as education expenses. Qualified education expenses include tuition, books, equipment, and certain other expenses needed to enroll at or attend an eligible educational institution.