Q | Can you tell me a little more about the Coverdell Education Savings Account? How does it work?

A | Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed.

• The beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution.
• This benefit applies to qualified higher education expenses as well as to qualified elementary and secondary education expenses.
• May be used for qualified education expenses, such as tuition and fees, required books, supplies and equipment and qualified expenses for room and board.
• The Hope and lifetime learning credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits.