Coverdell ESAs are set up on a per-child basis, with a bank or other financial institution approved by the IRS. Each child may have one or more separate accounts, and the child, a parent, grandparent or friend may contribute up to $2,000 to the account each year.

More than one person can contribute on behalf of the same child, but the total contributions for that child cannot exceed $2,000. No contributions can be made after the child turns 18 unless the child is a special needs child and no contributions can be made in the same year that a contribution is made to a qualified state tuition program on behalf of the child.

The person who contributes to the account must have a modified adjusted gross income (AGI) of less than $110,000 or less than $220,000 if the contributor files a joint return.