529 Plan and College Savings

A Coverdell or a Coverdell Education saving account is another way of saving for college. A Coverdell Education Savings Account is an Educational IRA account. Rules governing a Coverdell Education Savings Account are very different from those governing 529 plans. See our Educational Savings Accounts Compared section for differences between a Coverdell Education Saving Account and a 529 Plan.

One main advantage that a Coverdell Education Saving Account has over a 529 Plan is..

In a Coverdell Education Savings Account, you can invest in most investments. For example, you can pick your stocks, mutual funds, or bonds whereas in most 529 plans, you are only allowed to invest in pre-selected portfolios of diversified mutual funds. This can be seen as a benefit of having a 529 Plan vs a Coverdell Education Savings Account but for some savvy investors, it is a handicap. Below are resources on Coverdell Education Savings Accounts.

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