While both 529 plans and Coverdell ESAs can be used to help pay for education costs, there are a few important distinctions.

Let’s see if we can look at the differences between the Coverdell ESA and the 529 plan and see what might be best for you. While 529 savings accounts and Coverdell ESAs share similarities, here is what parents need to know about the differences between these two types of tax-advantaged college savings accounts. From stocks and bonds to mutual funds, ESAs offer more flexibility than 529 plans, which limit you to whatever investments are offered by the state. The biggest difference between Coverdell and 529 plans is how the money is invested. Similarities Between Coverdell ESA’s and 529 Plans. Choosing between a 529 and a Coverdell account is a balancing act between costs, opportunities, and the personal relationship between you and your loved ones.

3 Big Differences Between 529 College Savings Plans, UTMA Accounts Uniform Transfers to Minors Act accounts offer more flexible investment options, but a 529 may make getting financial aid easier. The key differences between these two savings options are contribution amounts, contribution restrictions, and investment options. The Coverdell ESA offers superior investment flexibility, potentially lower costs, and tax free treatment for a wide range of elementary and secondary school (K-12) costs, compared to 529 college savings plans. Therefore, it becomes necessary to take advantage of every advantage that you are given financially. With an ESA, you can choose almost any kind of option—stocks, bonds, mutual funds. The biggest difference is the way you invest the money.

With an ESA college savings plan, investment options are plentiful. However, the Coverdell ESA comes with limitations that could make a 529 … Sometimes called a Coverdell ESA (named for the guy in Congress who pushed for it), an ESA differs from a 529 plan in a few ways. Many parents are left trying to decide between a Coverdell plan and a 529 savings plan for their child's education needs. Another tool you can use for college savings is the Coverdell Education Savings Account (ESA). While tuition costs are rising every year, salaries are not.

If you’re uncertain where to start, it can be helpful to speak to a financial advisor, who can not only help you navigate the investment side of things, but also the tax and interpersonal factors!

What Are the Features of a Coverdell Education Savings Account (ESA)? ESAs and 529 plans let you, the account owner, set up investment accounts for a beneficiary, or recipient, that you designate.