Coverdale Education Savings Account
A Coverdell Education Savings Account focuses on the need for meeting the costs of higher education. Contributions can be made regardless of participation other IRA programs.
Qualified individuals, whether related to the child or not, may contribute to the combined maximum contribution of $500 per child per year, and continue to do so until the child reaches the age of 18. All contributions to the Coverdell Education Savings Account are non-deductible.
Earnings may be withdrawn tax-free if used to pay for the beneficiary's post-secondary education expenses before he or she reaches age 30. If the funds have not been distributed or rolled over by age 30, the earnings made at that time will be taxable and subject to a 10% IRS penalty tax to the beneficiary.
All dividends are credited and compounded quarterly.