An official State of Texas website.
Revision 13-3; Effective September 1, 2013
Coverdell Educational Savings Accounts (ESAs) are trusts or custodial accounts created by a donor for the benefit of a child under age 18 or someone with special needs. The funds put into the ESA are for educational use only. The ESAs are authorized and governed by Section 530 of the Internal Revenue Code. They are similar to college savings plans, commonly called 529 plans, authorized and governed by Section 529 of the Internal Revenue Code. ESAs differ from 529 plans in several ways, but the most important difference is that, unlike a 529 plan, once the person gives the money to set up the ESA, the donor may not withdraw the funds for personal use. The funds may only be used for the beneficiary, a student, and then only for expenses that meet the ESA guidelines. Consult with your regional attorney regarding an ESA.