A Coverdell account is sometimes called an "education IRA" because it's a tax-advantaged savings account to help pay education costs. It is opened in a specific child's name to help pay for their qualified educational expenses:

• Anyone can contribute to the account – parents, relatives, even family friends.
• Funds in the account grow tax-free.
• Withdrawals are also tax-free, as long as they are used for qualified education expenses.

Funds can be used to pay for qualified K-12 or secondary education expenses, but there are a few restrictions: There's a yearly $2,000 yearly limit for contributions from all sources, which can only be made until the child is age 18. Funds must be used by age 30 or transferred to an ESA for another child in the family. There are also income restrictions: Coverdell contributions phase out for joint filers with incomes between $190,000 and $220,000. For single filers, the adjusted gross income phase-out range is $95,000 to $110,000.