Coverdell Education Saving Changes

Coverdell saving plansWhile 529 plans had their federal tax deduction permanently extended recently, Coverdell Education saving accounts lost some of their appeal. A nice advantage of the Coverdell saving accounts was that the money in the accounts could be used for private elementary, jr high school and high school expenses. Beginning in 2011, however, this will no longer be the case. While the Coverdell saving account funds will still be able to be used for college, they will no longer be able to be used toward pre college education fees and expenses. If you choose to use Coverdell saving funds for the private primary education from 2011, the money will be assessed a 10% withdrawal penalty in addition to any earnings losing their tax-free withdrawal status.

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