Many characteristics of QTPs and CESAs coordinated by the 2001 Tax Act are scheduled to terminate December 31, 2010, barring any further action by Congress.
Rollovers Same as QTP, except Taxpayer must qualify that CESAs must be under MAGI phaseout to fully used by effect a rollover beneficiary before age 30, or rolled over.
The options include Qualified Tuition Programs (QTP), Coverdell Education Savings Accounts (CESA, formerly Education IRAs), and Qualified U.S.
Contributions to both a QTP and a CESA for the same beneficiary may be made in the same year.
QTP or CESA distributions in excess of QEEs will be partially included in the beneficiary's taxable income, based upon the ratio of QEEs to the distribution.
Although the impact of a QTP is somewhat less definitive, a CESA account balance is considered an asset of the student, and therefore negatively affects the student's eligibility for federal need-based financial aid.
While CESAs are self-directed, 529 college savings plans work more like 401(k) plans in that you are offered only a small number of investment options.
Finally, don't think of 529 college savings plans and CESAs as mutually exclusive.
CESA earnings build up tax-free and the money can be withdrawn to pay the beneficiary's elementary, secondary and college expenses.
Compared to a 529 plan, a CESA allows you to have total control over the investment of the account.
savings bonds, CESAs, and prepaid tuition plans) have significant tax advantages (e.g., tax-deferred earnings and potentially tax-free distributions).
CESA (assumes use S (C) S before BY1 for qualified education expenses) 2.