Education-Related Accounts

What this video covers

• The federal tax treatment of 529 contributions: why they are not federally tax-deductible, and how state deductions differ
• Why the 529 account owner retains indefinite control, and how this contrasts with custodial accounts and Coverdell ESA control transfer at the age of majority
• The $20,000 annual K-12 cap for 529 plans versus the uncapped K-12 use in Coverdell ESAs
• The $2,000 annual contribution limit for Coverdell Education Savings Accounts (ESAs), and why this limit is per beneficiary, not per contributor
• The modified adjusted gross income (MAGI) phase-out rules that block high-income contributors from funding Coverdell ESAs, while 529 plans have no income limits
• The age 18 contribution cutoff and age 30 distribution deadline for Coverdell ESAs, with special needs exceptions
• The SECURE 2.0 rules for rolling excess 529 funds into a beneficiary's Roth IRA: the 15-year account history, $35,000 lifetime cap, annual Roth individual retirement account (IRA) contribution limits, and the critical restriction that rollovers must go to the beneficiary's Roth IRA, not the account owner's