Accounts & CustomersQuestion 73 of 125
A Coverdell Education Savings Account (ESA) is designed primarily to:
a.Provide guaranteed retirement income
b.Fund a home purchase
c.Allow after-tax contributions to grow tax-free for qualified education expenses
d.Replace a 401(k) plan
Explanation
A Coverdell ESA lets contributors make nondeductible (after-tax) contributions that grow tax-free, with tax-free withdrawals when used for qualified education expenses. Contribution limits and income phase-outs apply, and funds generally must be used by the time the beneficiary reaches a set age.
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