Coverdell Education Savings Account (CESA)

This is a special savings account established to pay for qualified education expenses. These qualified tuition, fees, books, supplies, related equipment, room and board if the student’s course load is at least one-half of the full-time course load. The maximum annual contribution to the savings account of a beneficiary is $2,000 that will be used to pay a student’s school bills. There’s no deduction for contributions, but if the money is used to pay qualifying expenses, withdrawals are tax free.

ESA funds can also be spent for primary and high school bills. There is a special phase-out limit that changes every day.