Question

Which of the following is NOT true about Coverdell Education savings accounts?

a) Family may contribute up to $2000peryear
b) The account earns tax-free returns
c) You may use the money in the account at any time during your lifetime
d) Family may contribute to the account until the child turns 18

Answer 1

The false statement about Coverdell Education savings accounts is that you can use the money at any time during your lifetime, as these funds are meant specifically for the beneficiary's educational expenses before age 30.

Step-by-step explanation:

The statement that is NOT true about Coverdell Education savings accounts is that 'You may use the money in the account at any time during your lifetime'. The primary purpose of a Coverdell Education Savings Account (ESA) is to fund educational expenses for the designated beneficiary before they reach age 30. There are specific rules regarding contributions, which include that families may contribute up to $2000 per year and contributions can be made until the child turns 18. The account earns tax-free returns as long as it's used for qualified education expenses.