Coverdell ESA โ Education Savings Account
Tax-free growth, $2,000/year limit. K-12 and college eligible. Income phase-out: $95Kโ$110K single.
Why This Matters for Your Finances
Why: Coverdell ESA offers tax-free growth with more investment flexibility than 529. K-12 private school is eligible. $2K/yr limit with income phase-out.
How: FV = PV(1+r)^n + PMTร[(1+r)^nโ1]/r. Phase-out reduces contribution: (limitโAGI)/(limitโfloor)ร$2K.
- โ$2K/yr max per beneficiary
- โPhase-out: $95โ110K single
- โK-12 and college eligible
- โMust distribute by age 30
Sample Scenarios โ Click to Load
Beneficiary Information
Contributor Information
Education Expense Planning
With time on your side, consistent contributions will compound significantly.
Year-by-Year Projection
| Year | Age | Contribution | Growth | Balance |
|---|---|---|---|---|
| 0 | 5 | $2,000 | $0 | $2,000 |
| 1 | 6 | $2,000 | $280 | $4,280 |
| 2 | 7 | $2,000 | $440 | $6,720 |
| 3 | 8 | $2,000 | $610 | $9,330 |
| 4 | 9 | $2,000 | $793 | $12,123 |
| 5 | 10 | $2,000 | $989 | $15,112 |
| 6 | 11 | $2,000 | $1,198 | $18,310 |
| 7 | 12 | $2,000 | $1,422 | $21,731 |
| 8 | 13 | $2,000 | $1,661 | $25,392 |
| 9 | 14 | $2,000 | $1,917 | $29,310 |
| 10 | 15 | $2,000 | $2,192 | $33,502 |
| 11 | 16 | $2,000 | $2,485 | $37,987 |
| 12 | 17 | $2,000 | $2,799 | $42,786 |
| 13 | 18 | $2,000 | $3,135 | $47,921 |
Calculation Breakdown
Contribution Analysis
Growth Projection
Summary
Get AI-Powered Analysis
Get personalized insights on contribution strategies and ESA vs 529 comparison.
โ ๏ธFor educational purposes only โ not financial advice. Consult a qualified advisor before making decisions.
๐ก Money Facts
Annual max contribution
โ IRS
Phase-out single
โ IRS
Max beneficiary age
โ IRS
1. Key Takeaways
- โข $2K/yr max contribution
- โข Tax-free growth and withdrawals
- โข K-12 and college eligible
- โข More investment flexibility than 529
- โข Income phase-out: $95Kโ110K single
- โข Beneficiary must be under 30
2. Did You Know?
$2K limit
Per beneficiary
K-12
Private school OK
Phase-out
$95โ110K single
vs 529
More investment choice
Age 30
Must distribute
Qualified
Tuition, books, room
3. How It Works
FV = PV(1+r)^n + PMTร[(1+r)^nโ1]/r. Tax-free growth. Phase-out reduces contribution: (limitโAGI)/(limitโfloor)ร$2K.
Inputs
Beneficiary age, balance, contribution, AGI, filing status, return rate, years
Outputs
Projected balance, tax savings, phase-out amount
4. Expert Tips
K-12 use
ESA advantage over 529
Combine
ESA + 529 allowed
Rollover
To 529 or sibling ESA
Spend by 30
Or roll to family
5. Comparison Table
| Feature | ESA | 529 |
|---|---|---|
| Limit | $2K/yr | High |
| K-12 | Yes | Yes |
| Investments | Flexible | Plan options |
| Phase-out | Yes | No |
6. FAQ
ESA: $2K, flexible investments, phase-out. 529: higher limits, no phase-out.
Yes โ private school tuition, etc.
Must distribute or roll to family member.
Single $95โ110K; MFJ $190โ220K.
7. Quick Stats
$2K
Annual max
$95โ110K
Phase-out single
30
Max age
K-12
Eligible
8. Sources
9. Disclaimer
โ ๏ธ Warning: Estimates only. Verify with tax advisor. Not financial advice.