You may make qualified withdrawals from Coverdells (CESAs) for K-12 education expenses. The problem is that because of the low contribution limits, the benefits are negligable unless you start contributing very early.
Example: $2,000 earning 8% ($160/yr) saves the owner about $50 at the 30% marginal tax bracket. If you have ten years of contributions accumulated, plus compounded earnings, the benefit grows, but it's hard to achieve this for HS unless you start in the child's infancy.
You can attain nearly the same degree of tax efficiency with UTMAs, without the contribution cap or usage limitations. Since the first $1,500 of earnings is tax-advantaged you could have a significant balance accumulated (up to $20,000) before taxes become an issue.
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David Hollands, CFP
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