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You Don’t Need To Know What a Coverdell Is — 7 Comments

  1. yea i dont know why they just dont kill this in total. Maybe they consider this the humane way to kill it. One thing i believe to be true but not certain is that if you are contributing to a 529 then you cant contribute to both in the same year (at least more than the coverdell max which of course is very little). Thus even less reason to think about this.

  2. White Coat wrote:
    Compared to a 529 where you can contribute $13K a year, that’s a pretty important difference.
    I think there are much higher limits for 529 contributions. If you contribute more than $13K you must complete a gift tax return. You can gift 5 years of $13K all at once before you must use your lifetime exclusion which is $5,120,000 for 2012. Each individual 529 plan has its own rules for the maximum contribution that they will accept, but you can contribute this entire amount in one year.

  3. thanks for the correction. i looked it up and the 13k with gift tax issues are the issues with doing both. as you mentioned at this point, not really worth doing it still.

  4. You are correct that you can put in $13K x 5 all at once. In fact your spouse can put in another $13K x 5 as well. So you could stuff in $130K the year the kid is born and then forget about it without any gift tax/estate tax issues.

  5. It’s sad how Congress killed what few, small advantages the Coverdell had. Might as well have just killed it formally instead of this death by attrition.

    Maybe the $500 is intended to let those with existing accounts contribute enough to cover the fees? Just wild speculation.

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