Coverdell Education Savings Account

A Coverdell Education Savings Account (ESA) is a tax-advantaged investment account designed to help families save for education expenses, including K-12 tuition and college costs. Contributions are made with after-tax dollars, but earnings grow tax-free if used for qualified education expenses. The account allows investments like stocks, bonds, and mutual funds, giving flexibility in how funds grow. There are annual contribution limits (currently $2,000 per student) and income restrictions for contributors. Withdrawals for qualified education costs are tax-free, making it a useful tool for saving for future education needs.