NorCalDad wrote:umfundi wrote:nydad wrote:Coverdells can be used for non-college education (e.g. private high school).
Yes, but:
Is there really enough time to reap investment gains and get much tax benefit? I decided not, and did not use their Coverdells for my kids' high school tuition.
Keith
Depends on when you decide to start funding and withdraw. We are planning to use public schools through 8th grade but are on the fence about private school for high school. That gives us 12+ years to invest. Not a ton of money, but I don't see the downside if you're just going to do a 529 anyway, other than (currently) having to go somewhere other than Vanguard.
If Vanguard allows me to open a Coverdell account after my child's birth, I would use these funds in Vanguard Coverdell (adding funds over time):
Short-Term Investment Grade
LifeStrategy (Moderate Growth or Growth)
Wellington
Wellesley
These are funds that I would like to use in tax-shielded accounts only and NOT in taxable accounts.
If I can't open a Coverdell at Vanguard by then, I will probably use TD Ameritrade for a couple of reasons:
1.) I use them for my Health Savings Account brokerage account (with HSA Bank as custodian)
2.) I can purchase ETFs commission free including Vanguard Short Term Corporate Index (VCSH)
I thought that Coverdells were unpopular because of the sunset provision where contributions would have been limited to $500 and K-12 school expenses would have no longer qualified. Now, $2000 contribution limit and the K-12 education expenses are qualified expenses from the Coverdell account. My understanding is that they are permanent as part of the last-minute "fiscal cliff fix".