Can you do both a 529 Plan and a Coverdell ESA?

Asked 3 years ago

I'm wondering if we can run these long-term investments/savings accounts the same one would run a 401K and an IRA. Any ideas?

Andia Rispah Igobwa

Tuesday, July 06, 2021

Yes. Before you make a decision, it is important to consider the following:

  • What are the state laws with 529 Plans and Coverdell ESAs in regards to custodians?
  • What kind of investment are you looking for?
  • What features does each account have that appeal to your needs 5 years down the line?

Other things to keep in mind include:

  • What happens if I change my state residency while my child is young?
  • If I use funds from one account to put them into another before they turn 18, will there be any tax penalties?
  • What would happen if I take distributions from either account before the funds reach their distribution age, or what would happen if my child goes off on their own

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