Coverdell Education Savings Account

Qualified education expenses include college expenses and certain elementary and secondary school expenses including:

• Tuition
• Fees
• Books
• Supplies
• Equipment
• Academic tutoring
• Special needs services
• Room and board expenses
• Uniforms
• Transportation
• Educational computer technology or equipment
• Internet access

The deadline to contribute to a Coverdell Education Savings Account (ESA) for a particular tax year is generally April 15 (or tax day) of the following year. When this date occurs on a weekend or a legal holiday, the following business day becomes the deadline. Tax return extensions will not affect this deadline.
 
When you contribute to your IRA between January 1 and April 15 (or tax day) for the previous tax year, it’s referred to as a “carryback” or “prior year” contribution.

Unlike a 529 plan, the sum in an education IRA must be distributed to a child if not used for college. ESA treatment in federal financial aid is like that of 529 plans—as an asset of the parent (custodian). A withdrawal is not reported as income if it is tax-free at the federal tax level.

Designated beneficiaries with special needs:

• Will be eligible to receive annual contributions after attaining age 18
• Will not have his or her Education Savings Account balance distributed within 30 days after attaining age 30
• Will be eligible to receive rollover contributions from qualified family members after attaining age 30
• Will be eligible to be named as a designated beneficiary to a qualified family member’s Education Savings Account after attaining age 30