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What is it? – Coverdell Education Savings Account was created to help parents pay for children's education at any level, from kindergarten through high school and higher education.
But if withdrawals are used for nonqualified educational expenses, they are subject to ordinary income tax plus a 10% penalty on the earnings. Any balance remaining in the Coverdell must be distributed or transferred to another eligible family member when the beneficiary reaches age 30.
Financial aid – College savings plans can impact a student's eligibility for financial aid. Regardless of whether the Coverdell is owned by either the student or the parent, it's generally considered a parental asset, which will likely have less impact on financial aid.
Your financial advisor can help you learn more about your options and put together a strategy to achieve your education-saving goals.
1 $10,000 limit applies separately to electronic Series EE and I bonds. $5,000 limit applies to paper Series I bonds.
This content should not be depended upon for other than broadly informational purposes. Please consult your tax advisor about your situation. Edward Jones, its financial advisors and employees cannot provide tax or legal advice.