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#43321 - 05/12/08 12:46 PM Coverdell vs 529 plan
muneca
Registered: 05/12/08
Posts: 2 		Hi -
I'm new to all this info and very confused! I'm hoping someone can clear this up for me. I'm confused about the benefit of a Coverdell especially if in 2010 you can no longer use the funds for grades K-12 tuition, etc.
First, is it true you won't be able to use the funds for K-12 starting in 2010? If so, then both a Coverdell and 529 are for college savings, so why even have a Coverdell?
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#43323 - 05/12/08 03:02 PM Re: Coverdell vs 529 plan [Re: muneca]
Joe Hurley Administrator
 Registered: 01/07/00
Posts: 2056 		The K-12 provision expires at the end of 2010 so the change is effective 2011. There's a much bigger trap awaiting the unsuspecting Coverdell beneficiary in 2011: distributions become taxable for college if you claim a Hope or Lifetime Learning credit. I hope Congress fixes that problem before it's too late. The Coverdell's saving grace (for those who spot the problem in time) is that it can be transferred tax-free into a 529 at any time.

Joe
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#43328 - 05/12/08 07:04 PM Re: Coverdell vs 529 plan [Re: Joe Hurley]
muneca
Registered: 05/12/08
Posts: 2 		Thanks for the info. So there doesn't sound like there is any real benefit of opening a coverdell if I already have a 529 set up for my son, especially after 2011.
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#43330 - 05/12/08 10:00 PM Re: Coverdell vs 529 plan [Re: muneca]
bwilk
Registered: 05/14/01
Posts: 3279 		A CESA gives you access to many more fund choices than does a 529. Also, the fees associated with a CESA may be lower than many 529s. I would not say that there is no point in having one if the K-12 provision goes away.
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