John M. Hoffman & Associates CPAs

Frequently Asked Tax Questions

Individual Retirement Accounts – IRAs

Coverdell Education Savings Accounts (formerly Education IRA)

Coverdell accounts are often overlooked in favor of section 529 college savings plans. The primary difference is that Coverdell accounts have annual contribution limits of $2,000 and there is an income limit. The income limit can be worked out  by having the child do their own account (unless that child has income over $95,000). Other differences include the requirement that the beneficiary be under 18 years of age and that the account can be used for education as early on as elementary school (where 529 plans are for post high school education expenses).