Coverdell Education Savings Accounts
The Coverdell Education Savings Account (CESA) is similar to a 529 savings plan in that contributions are made with after-tax dollars and all withdrawals for qualified educational expenses can be made tax-free, but with the CESA, withdrawals must be made by the time the beneficiary turns 30. Withdrawals can be used to finance any level of education from the primary and secondary levels through college. No contributions can be made to a CESA once the beneficiary reaches the age of 18, unless the beneficiary is an individual with special needs. Funds within the CESA can be used by the beneficiary up to age 30.
Until the beneficiary becomes majority age, CESAs are controlled by a responsible individual. This individual must be the parent or legal guardian of the beneficiary. This means that someone who opens a CESA, but is not the parent, will not be able to make the decisions within the account. For example, if a grandmother opens a CESA for her grandson, she would not be able to maintain control o