Coverdell Education Savings Account

Overview of Coverdell Education Savings Account

Coverdell Education Savings Account is a type of savings account that is found in the United States of America. The Coverdell Education savings account is provided by the Internal Revenue Service. This savings account is extensively used in the US financial market.

Description of Coverdell Education Savings Account

The Coverdell Education Savings Account is an account, which enables the holder to provide for the education of the beneficiary he has nominated in the account. The Coverdell Education Savings Account may also be described as a trust.

Rules and Regulations of Coverdell Education Savings Account

There are certain rules and regulations that govern the working of the Coverdell Education Savings Account. As per the rules of the Coverdell Education Savings Account the specified beneficiary has to be less than 18 years old at the time of the opening of the Coverdell Education Savings Account. The beneficiary may also be categorized as a special needs beneficiary when the account is being opened.

In order for the particular account to be regarded as a Coverdell Education Savings Account the account has to be given the same name when it is being opened. There are some other rules as well:

• The balance that is present in the account is supposed to be allocated within a month after the beneficiary expires or becomes 30 years old. However this rule would be applicable if the beneficiary happens to be a special needs beneficiary.
• The custodian or the trustee of the account is supposed to be a business organization or bank that is recognized by the Internal Revenue Service.
• The amount of cash present in the account is not supposed to be used for the purposes of investing in life insurance schemes.
• According to the contractual agreement the custodian or trustee of the account is supposed to receive the contribution in cash.
• The money that is there in the account can be combined with either a common investment fund or a common trust fund. Any other form of property would not be accepted.
• The amount of contribution is not supposed to exceed $2,000 for the particular year.