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Finance a la shmoop what is a Coverdell education savings account? Coverdell...[Man using a red umbrella]

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nope not an umbrella for the farmer in the well what is a Dell anyway? uh no

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different Dell remember farmer in the Dell? all right moving on

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Coverdell was the senator who named this type of tax deferred savings account and

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note it's tax deferred not tax free maybe that is you might put two grand a

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year in this account and you don't pay tax on it this year it just gets

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invested and it grows just like a 401k account and an IRA and a Roth more or

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less but then when you withdraw the money you don't pay tax on it if you use [Cash withdrawn from ATM]

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the dough for school that is for like private school fifth grade books and

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uniforms or that no athletic scholarship in the Ivy League tuition at Princeton [Man walking towards college building and football hits his head]

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Or the iPad app suite from shmoop yeah

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you could spend it on us we'd appreciate it thank you if you don't spend the

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money on education well then you get taxed in the normal way as if it's

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ordinary income there are all kinds of restrictions in this plan like there's a [Restrictions appear]

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max of two grand contributed per kid who benefits from it the dough has to be

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distributed fully by the time the kid is thirty or go to others in the family for

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education and if your family makes too much money like you work too hard you're

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too successful well you might have to cover your own Dell yeah so yeah it's a [Man walking along with a Dell laptop]

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great option for some and an excellent way to attend the school of your dreams

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while temporarily staving off the taxes of your nightmares if you're really lost

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or something to spend it on you know think of your friends here at shmoop...

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we're happy to take your dough

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