COVERDELL EDUCATION SAVINGS ACCOUNTS

These accounts were referred to as Education IRA's when first introduced. You can deposit up to $2,000 per student per year. Your contributions are not tax deductible but withdrawals for educational expenses are tax free. You can contribute to this account until the beneficiary turns 18.

One big difference between these accounts and 529s are the contribution restrictions. With ESA's, you can only make a full contribution if you earn less than $100,000 or $200,000 for a married couple filing jointly.

Like most investments, you'll have to decide how much risk to assume. You as the account owner will decide how and where to invest your money. It may be a good idea to consult a financial professional to determine the impact of an ESA on your overall financial situation as well as on the financial aid eligibility of your child.