| p>This investment retirement account (IRA) is | | | | annual tax-saving contribution that they can invest |
| useful to you as an investor to understand | | | | in the stock market toward the education of a |
| because it may be a good way for you to save | | | | studious and responsible child. In addition, if your |
| for your kid's education AND save on taxes. | | | | child received a Coverdell ESA distribution, you |
| These plans are now called Coverdell Education | | | | now can also claim Hope Scholarship or Lifetime |
| Savings Accounts in honor of the late U.S. Sen. | | | | Learning credits. Just make sure you don't use |
| Paul Coverdell. Individuals can make annual | | | | Coverdell money to pay for the same expenses |
| contributions of up to $2,000 per child into an | | | | you use to claim an education credit. |
| account that's exclusively for helping to pay higher | | | | The beneficiary (your child) of the education IRA |
| education costs. The money contributed to a | | | | must withdraw the funds by age 30 if they don't |
| Coverdell account doesn't count against the | | | | go to college and pay taxes and penalties on it. |
| $3,000 ($3,500 if 50 and older) annual total | | | | However, the account can be transferred to a |
| individuals may contribute to their combined | | | | sibling or the beneficiary's child if they don't pursue |
| personal individual IRAs. | | | | a higher academic degree or use it all. |
| The earnings and withdrawals from a Coverdell | | | | Once you have the account open you can use |
| account are tax-free, but you can't deduct the | | | | the stock market to help finance your child's |
| contributions from your income tax because the | | | | education selling the stock at a high price after |
| account is for the benefit of the child, not the | | | | you have bought it at a low price using techniques |
| contributor. This is great for parents who are | | | | such as I teach. |
| good savers and investors who want to make an | | | | |