[berlinsmommy]

I hope someone can help me! Berlin is going to a private school that is preschool-12th grade. If I read the IRS site correctly, Coverdell ESAs can be used for private school tuition for grades 1-12. I also understand that the deposits do not earn any sort of tax benefits, but that the earnings are tax free as long as the Coverdell is used for education expenses (such as her tuition from grades 1-12).

I also do understand that this is totally different than a 529. We already have 2 529s for her, but I may want to open a Coverdell for her elementary and high school tuition, but I'm wondering if it is even worth it? Where do I go to set one up? Are there fees to them, like some 529s have? If so, would it be better to stick money in CDs or similar which have no fees, but also the earnings are taxed?

Just want to explore my options since first grade is only 3 years away, and it would be nice to stash away some money for future tuition, especially since I'm going to be working full time for a few months (coworker is having a baby), and for the next few months we will have higher than usual income, but of course I want to utilize as much tax savings and/or interest income as possible.

[scpend]

Don't know if you got an answer to this. Here's a good source of information on ESAs (and 529s, too):

http://www.savingforcollege.com/intro_to_esas/

[berlinsmommy]

Unless Congress acts, certian ESA benefits expire after 2010. K -12 expenses will no longer qualify, the annual contribution limit will be reduced to $500, and withdrawals will not be tax-free in any year in which a Hope credit or Lifetime credit or Lifetime Learning credit is claimed for the beneficiary.

Thanks for the website. If this is the case, a Coverdell ESA may NOT be worth it for us since we have 529s in place for college, I was considering this for K-12, which doesn't even start until 2007 for us.

[scpend]

Most "experts" I've heard speak on the subject say that there is no way Congress can let the ESA benefits expire. There is too much at stake. Most believe they will reauthorize it at least at the current level of benefits. Maybe they will improve it.