What is the difference between a 529 and a Coverdell?

529 plans are state-sponsored, so rules and contribution limits vary depending on your state. The tax benefits are similar, but some states also provide 529 plan incentives, such as matching contributions for low-income families. However, generally speaking, the contribution limits are higher for a 529 plan than for a Coverdell Education Savings Account (ESA), and there are no age limits for when contributions can be made or distributions taken. 529 plans and Coverdell accounts also define qualified expenses somewhat differently. For example, 529 plans place greater limits on how funds can be used for the K-12 educational expenses of a designated beneficiary.