Investors have their choice of stocks, bonds, mutual funds and certificates of deposit. These plans have a lot of small print and conditions, so I recommend reading the details for your state 529 plan or reading more about the Coverdell ESA before opening an accout and making contributions.


All assets held in a 529 plan must be invested in portfolios managed by state approved investment companies. Broader applications. Using A 529 Plan To Pay For Apprenticeship Programs.

You can keep control of a 529 plan even as a student withdraws from it, so if you don’t want to turn the account over entirely to the student, choose a 529 over an ESA. And you can contribute to both types of plans in the same year for the same beneficiary.

The ESA allows contributions of up to $2,000 per year per beneficiary and must be made by the filing date for the tax year (generally April 15).

For example, a parent with three children may take a $10,000 distribution to pay student loans for each child, for a total of $30,000.

529 plans are tax-advantaged accounts designed to save for college and private K-12 education. 529 plan account owners may now withdraw up to $10,000 tax-free for payments toward qualified education loans. ESA funds can be used to pay for qualified education expenses from kindergarten through high school, as well as college.

Unlike Coverdell ESAs, contribution amounts will vary from state to state, though there is no income limit restricting your contributions.
I write for Savingforcollege.com, the leading independent source of information…. 529 plans can be used to pay for any eligible post-secondary institution, including trade schools and vocational programs. The law provides a new way for grandparents to help a grandchild pay for college without affecting financial aid eligibility. 529 plans however are more targeted in that you are restricted to using the funds only in connection with attendance at a college or university. Contributions to a 529 plan are not deductible for income tax purposes, however the earnings on your contributions can grow tax-deferred. You can select the state in which you want to grow your 529 plan. More college savings articles: Coverdell Educational … Coverdell ESA vs 529 A Coverdell ESA is a tax-advantaged educational savings plan that a parent/ guardian can apply for on behalf of a beneficiary to cover future elementary and secondary educational expenses. Members should be aware that investment markets have inherent risks, and past performance does not assure future results. Unlike IRAs, contributions are not tax-deductible, though earnings on those contributions can grow tax-deferred basis.

You can hold the funds in a brokerage account and invest in stocks, bonds, mutual funds or ETF’s.