How To Save For A Child's Education

Coverdell Education Savings Account

The United States government created the Coverdell Education Savings Account (ESA) to help families save for college while also taking advantage of tax savings. Parents are permitted to make up to two thousand dollars per year in contributions to this account. This is per account, so a parent with more than one child may make up to two thousand dollars per year in contributions to each child's account without paying taxes on this money. A Coverdell ESA can include almost any type of investment, which makes it possible for a child to end up with a lot more money than their parent contributed if the stock market benefits them. If the amount in the account is not completely dispersed to the student by the time the student reaches the age of thirty, the money becomes taxable, unless the student decides to create a new beneficiary for the account, such as a child of their own. It’s one of the many tax advantages this account offers.

Continue reading to discover the benefits of savings bonds.