Can someone give me the general differences between these two types of education savings plans? All I know is that the 529 is for college only and the coverdell is for any education.

Are they pre or post tax? Other considerations?

My kids will be going to catholic school and I'd like to have some cushion for their high school years which is why I'm leaning towards coverdell. But I don't want to tie myself into any plan that could go unused and incure a fee to withdraw. This concern applies to both.

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Posted by raw dog

Baton Rouge

Member since Nov 2011

483 posts

Posted on 3/20/15 at 9:47 am to poochie

Believe Coverdell has a $2,000/yr max contribution. That's one difference.

This post was edited on 3/20/15 at 9:48 am

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Posted by DanglingFury

Living the dream

Member since Dec 2007

20449 posts

Posted on 3/21/15 at 7:43 pm to poochie

look into LA Start

it's a 529 but has a 2-14% match depending on your income, and it also allows a state tax deduction. has to be used for qualified higher education expenses at accredited colleges (anywhere) or 10% penalty on growth applies. don't overfund. but it'll be useful if kid goes to college.

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Posted by Jp1LSU

Fiji

Member since Oct 2005

2542 posts

Posted on 3/24/15 at 2:25 pm to poochie

I did the Coverdale option cause I can pick my own stocks/funds to invest in one trade. The limit per year is $2k (I think) so it can't be the whole tuition savings plan for us.
One thing to consider especially with custodial accounts is that the funds in there count towards the child's net worth. This matters when applying for various programs. Need based and other college programs will count those funds.
In a Coverdale acct the funds count as the parents money.

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