109 MG Tell Tell, What's a Coverdell?

Money Girl

Macmillan Holdings, LLC

Investing, Education, Business, Entrepreneurship, How To

4.6 • 1.8K Ratings

🗓️ 4 February 2009

⏱️ 6 minutes

🔗️ Recording | iTunes | RSS

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0:00.0	Hello and welcome to Money Girls Quick and Dirty Tips for a Richer Life.
0:09.0	I'm your host Laura Adams.
0:12.0	This episode is about a great way to save for a child's education using CoverDell education
0:18.0	education savings accounts.
0:20.0	In last week's show I discussed the advantages of using 529 plans to save for higher education.
0:26.5	Today's topic is about another tax advantage account that can be used to save for any level of education from kindergarten through graduate school.
0:35.0	It's called a Coverdell Savings Account.
0:37.0	Coverdell's also differ from 529 plans because they're not as flexible.
0:42.0	They place limitations on who can contribute.
0:45.2	How much can be contributed each year and the age of the student who will use the funds.
0:50.2	When you open a CoverDell, the account must be for a designated beneficiary who's under the age of 18.
0:56.0	After the student's 18th birthday, no more contributions can be made unless the account is for a special needs beneficiary.
1:04.5	The funds must generally be used by the time the student reaches age 30 in order to avoid
1:09.1	taxes and penalties.
1:11.6	With CoverDell's and 529 plans, your contributions and earnings always grow tax-free, as long as distributions
1:18.7	are used to pay for qualified expenses at eligible schools.
1:23.0	CoverDell Funds can be used to pay for the student's tuition and all associated fees,
1:28.0	books, equipment, and supplies for their attendance at an eligible institution. This could be any post-secondary
1:34.7	school such as a university or college that's eligible to participate in
1:38.9	federal student aid. Coverdell funds can also be used for reasonable room and board for those who are considered at least half-time students.
1:48.0	The unique feature of Coverdelles is that they can also be used to pay for the expenses of younger students.
1:55.0	This includes children in kindergarten through grade 12 who attend any eligible public, private, or religious school.
	...

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