Investors > Coverdell ESA

The Coverdell Education Savings Account (Coverdell ESA) was formerly known as the Education Individual Retirement Account (Education IRA) until mid-2001 when the name was changed. The Coverdell ESA is an account that is set up for the purpose of paying educational expenses. Much like College Savings Plans, the Coverdell ESA is an investment that should be made with your parent’s complete involvement.

Think of the Coverdell ESA as a bucket in which you put all kinds of investments – stock, bonds, and other securities. Once the account is established, you can treat it like any other custodial account opened on your behalf for buying and selling stock. What makes a Coverdell ESA so special is that withdrawals from these accounts are not taxed and can be used to pay for elementary school, grade school, high school, and college expenses such as tuition, computer equipment, and other school-related items. If you are accessing this website, however, you are probably in high school so the Coverdell ESA would only be useful for your college expenses.