Coverdell Education Savings Account 
When your children are young it's hard to imagine them strolling on a college campus or cramming for final exams. But it's never to early to save for your child's education … especially with today's rising cost of a college degree. Although contributions to an Coverdell Education Savings Account are not tax deductible, your withdrawals (including earnings) are tax free if used for education expenses.
- The sole purpose of the Coverdell Education Savings Account is to help pay for education expenses, such
 as tuition, fees, books, supplies and equipment. In some cases, room and board is also a qualified expense.
- Anyone who meets the income requirements can open and contribute to a child's Coverdell Education Savings Account. This includes grandparents, aunts and uncles, family friends, or anyone else who wants to pitch in to your child's college fund. However, the total contributions to all Coverdell Education Savings Account for each child cannot exceed $2,000 per year.
- The account will be in the child's name using the child's social security number. The child must qualify for Financial Plus membership.
- Contributions can be made until the child reaches the age of 18.
- Withdrawals for qualified education expenses will be tax free as long as all funds are used before the child reaches age 30.
- New for 2002 - Elementary and Secondary school expenses have been added to the list of qualified expenses that may be paid tax free.
- If the child does not attend college or leaves school before all the funds are withdrawn, the remaining funds can be transferred to another child in the family.
Individuals contributing to an Coverdell Education Savings Account can still fund their own Roth or Traditional IRA up to $4,000 per year, as long as the eligibility requirements are met.
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