Sam Waterston has been making contributions into an individual retirement account to help pay for his children to go to college.Which type of account is he most likely using?

Question

Quizplus · Accepted Answer

The Coverdell Education Savings Account (ESA) is a type of tax-advantaged investment account specifically designed to help families save for education expenses, including elementary, secondary, and post-secondary education costs. Unlike traditional and Roth IRA accounts, which have annual contribution limits of $6,000 for individuals under age 50 (as of 2021), Coverdell ESAs have a lower annual contribution limit of $2,000 per year per child, but the funds must be used for qualified education expenses. Therefore, since Sam Waterston is saving for his children's college education, a Coverdell ESA may be the best choice for him.

Sam Waterston Has Been Making Contributions into an Individual Retirement