Education Savings Accounts
Chapters in this video
- 0:00 Coverdell ESA: the tiny $2,000 piggy bank
- 1:51 Per beneficiary, not per contributor
- 2:57 Age 18 cutoff and age 30 deadline
- 3:43 MAGI income phase-out limits
- 3:57 529 plan: the massive uncapped vault
- 4:25 Five-year gift tax averaging at $95,000
- 4:58 Qualified expenses: K-12 vs higher ed trap
- 6:11 Non-qualified withdrawal tax on earnings only
- 6:33 529-to-Roth rollover three hurdles
- 8:17 Side-by-side Coverdell vs 529 comparison
- 8:21 Rapid-fire exam recap
What this video covers
- Why the Coverdell ESA contribution limit is $2,000 per beneficiary, not per contributor, and how that shared limit works across all accounts for one child
- The age 18 contribution cutoff and age 30 distribution deadline for Coverdell ESAs, and how special-needs beneficiaries are treated differently
- Contributor Modified Adjusted Gross Income (MAGI) phase-out ranges for Coverdell ESAs, and how they block high earners from contributing
- Why 529 plans have no federal contribution limit and no contributor income limits, and how gift tax rules still apply
- How 5-year gift tax averaging lets a single contributor front-load $95,000 into a 529 without triggering gift tax reporting
- The critical distinction between qualified higher-education expenses and the narrower, hard-capped K-12 list, including the room and board trap
- The three simultaneous requirements for a 529-to-Roth IRA rollover: 15-year account age, 5-year contribution aging, and $35,000 lifetime cap, plus which Roth IRA limits apply and which do not
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. When you're ready to drill the topic, the full Series 7 course adds adaptive practice questions and spaced-repetition flashcards.
Start on this site: free Series 7 practice questions · Series 7 pass rate