The in-laws are setting up a Coverdell Education Savings Account for DS. Anyone have one? I had actually never heard of this until they sent us the paperwork to sign. Their financial adviser recommended Coverdell over a 529. I know 529s have their limitations, and the Coverdell does sound nice in that it can be applied toward education at any level--so if we wanted to use it toward a private high school, we could. I also see a few points on the Wikipedia entry, such as the annual contribution cap is lower than a 529's, and that the funds must be used or transferred by the age of 30. Any other downsides I should know about? If you have a Coverdell ESA for your kid(s), why did you choose it over a 529 or other option?
The advice I've read is, if contribution is less than the coverdell limit, then use coverdell. One thing I read about coverdell though, the things you can use it on may change. We have 529 so I have not kept up with coverdell allowed expenses. But when I was reading about it 3yrs ago, there was a possibility that private high school expenses will no longer be allowed.
Interesting. Thanks for the replies. I know here in WA there would be no tax benefit to a 529, but in the IL's state, there would be. I think the chose the Coverdell specifically for the flexibility. In any case, I'm thrilled. We haven't set up an account yet, so it's nice knowing there's something already there for DS.
The only downside really is the low limit. You can always convert to a 529 down the road if you feel that is a better option so I don't see a big downside.