Coverdell Education Savings Account and 529 Plans As a parent, grandparent or guardian, one of the most important things you can plan for is your child’s education. A Coverdell Education Savings Account or 529 Plan are both excellent financial tools to use in saving for their education. Certus Financial Services will work with you to determine the best product for your specific needs. There are some similarities between them:You control how assets are investedEarnings grow tax deferredFunds may be withdrawn free of federal income tax if used for qualified education expensesAssets can be transferred to another family member if the intended beneficiary doesn't attend college or doesn't use all of the assetsAssets held may also affect your child's access to financial aid There are also some key differences:CoverdellContribution limit of $2,000 per year for each child.Adjusted Gross Income (AGI) phase-out levels for eligible contributors of $190,000 to $220,000 for married taxpayers filing joint returns.If there is a balance in the Coverdell ESA when the beneficiary reaches age 30, it must generally be distributed within 30 days.Assets may be withdrawn for qualified elementary and secondary education expenses. That includes tuition to public or private schools, kindergarten through 12th grade, as well as computers and educational software.529Contribution limits are set by the state offering the plan, sometimes as much as $360,000, and there is no income limit for contributors.The federal government allows yearly contributions from single taxpayers up to $14,000 or a lump sum of $70,000 in the first year of a five-year period to avoid gift-tax consequences. Married couples may contribute up to $28,000 per year or $140,000 in a lump sum for that first year contribution.No age limit on using 529 plan assets.529 plan assets may only be used for eligible expenses at accredited public or private colleges and universities.Investors can invest in any state's plan to find a portfolio that most closely fits their objectives.The state offering a 529 plan has portfolios administered by investment companies, and assets may only be invested in the portfolios offered by the state-sponsored plan in which you participate.529 Disclosure: Before investing, the investor should consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan.