Good news for Coverdell Education Savings Accounts! As part of the tax cut compromise signed by President Obama on December 17, 2010, the favorable rules for Coverdell Education Savings Accounts (ESAs) have been extended through 2012. The rules were scheduled to revert to the way they were in 2001, when the contribution limit was only $500 and, worse, distributions for qualified education expenses were at least partially taxable. Under the rules in effect since 2002, which are now extended through 2012, the contribution limit is $2,000 per year until the child reaches 18 years old (unless they are disabled), and most importantly distributions for qualified education expenses are tax free. Qualified education expenses are broadly defined and include certain expenses for kindergarten through college. Look for an article soon in the IRA and 401(k) Insights for more details.