What Is a CESA?

Coverdell Education Savings Accounts allow individuals to invest funds for educational purposes. Formerly known as an Education IRA, this trust or custodial account is created for the purpose of paying qualified education expenses of the designated beneficiary. Contributions to a Coverdell ESA are not deductible, but all distributions are tax-free if they are less than qualified education expenses at an eligible institution. Education savings accounts can be applied to qualified elementary, secondary and higher education expenses.

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