What is a Coverdell ESA and how does it differ from a 529?

A Coverdell Education Savings Account (ESA) is a tax-advantaged account that, like a 529, grows tax-free and comes out tax-free for qualified education expenses. The key differences: Coverdells let you choose almost any investment (individual stocks, ETFs, mutual funds) rather than the menu a 529 offers, and they cover K-12 costs broadly. But the limits are tight — you can contribute only $2,000 per beneficiary per year, contributions phase out at higher incomes (around $110,000 single / $220,000 married), and the funds generally must be used by age 30. Most families find the 529 more flexible thanks to its high contribution ceiling and the new Roth rollover option. A Coverdell can be a useful supplement if you want hands-on investment control for a younger child.