Anyone may fund a Coverdell education savings account (formerly education IRA) for a child (beneficiary). The maximum allowed contribution is $2,000 per year in aggregate, up until the beneficiary's 18th birthday, unless the beneficiary is a special-needs beneficiary. The earnings remain tax-free when they are withdrawn and used for qualified educational expenses. All assets must be distributed within 30 days of the beneficiary's attaining age 30, unless the beneficiary is a special-needs beneficiary.

It is important to note that contributions to Coverdell accounts are not tax deductible.

The full $2,000 may be contributed each year by a single person or married person filing separately as long as the contributor has an adjusted gross income (AGI) less than or equal to $95,000. As soon as the AGI exceeds $95,000, a phase-out will begin. The phase-out will be $100 for each $750 of extra adjusted gross income and will decline to $0 when the AGI reaches $110,000.

For married couples filing jointly, the phase-out starts at $190,000. The contribution allowance drops by $100 for every $1,500 of extra AGI, falling to $0 at $220,000.

IRS Publication 970 provides more information on Coverdells.

The restrictions discussed above apply per contributor.