College Savings Coverdell
March 7th, 2006
Question: Open a Coverdell or 529?
I asked this same question the other day and didn’t get much of a response. Maybe it’s just not a very exciting question…lol.
I’m due any day now with my first child. I want to open a college savings account as soon as I have a SS#. I can’t afford to put much in…maybe a total of $1,000 a year. Would you recommend Coverdell of 529? Why?
Answer: I don’t know enough about the subject to give you an intelligent answer. However, I have noticed my favorite tax site,
http://www.fairmark.com/
has a fairly lengthy discussion of Coverdell accounts. (See the link on the menu down the left side of the screen.) I looked at it briefly and noticed the following comment:
“Qualified expenses include some items that would not qualify for purposes of a 529 account. You can use a Coverdell account for primary and secondary education, or to buy a computer for the use of a student.”
I suggest you read (or at least scan) the all the pages on Coverdell accounts from that site. I would bet most of the important differences between 529s and Coverdell accounts are at least mentioned.
Posted in 
Tags: