Coverdell Education Savings Account (ESA)

A tax-advantaged custodial or trust account set up to pay for a beneficiary’s qualified education expenses—such as tuition, books, and supplies—for elementary, secondary, or higher education. Contributions are not tax deductible, but investments grow tax-deferred and withdrawals are tax-free if used for qualified expenses. The annual contribution limit is $2,000 per beneficiary under age 18, subject to income limits, and funds must be used by age 30 unless the beneficiary has special needs.