A Coverdell Education Savings Account (ESA) can play an important role in helping pay for qualified education expenses.
Most of the American Funds, including the American Funds Portfolio Series℠, are available for Coverdell ESA investments.
Who Is Eligible?
You can contribute to a Coverdell ESA even if you don’t have earned income. The contribution is limited to $2,000 a year for each beneficiary until the age of 18.
The ability to contribute is phased out as your adjusted gross income increases from:
- $95,000 to $110,000 for individuals
- $190,000 to $220,000 for married couples filing jointly
Who Would Benefit?
Investors who expect to use the funds for K-12 and beyond
A Coverdell ESA can be used for education expenses such as tuition, books, room and board, computers, peripherals, software and internet access for kindergarten through high school, college and graduate school.
Earnings grow tax-free with the potential to help offset rising education costs.
Investors who may want the beneficiary to gain control of the account
The beneficiary can assume control at the age of majority — 18 or 21 in most states.
Investors who want flexible investment options
Most of the American Funds can be used for Coverdell Education Savings Accounts. Account owners can change investments as often as they want.
For help creating an investment mix tailored to your financial goals, contact your financial professional.