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You make very good points on both. The Roth IRA conversion is a little out of the scope of this article, but you are correct in saying that a regular IRA rollover is a good strategy for those above the income limits.

In terms of the Coverdell ownership, you usually have to make a contribution to open the account, which is why I kind of lumped the two together – to open a new account with an initital contribution, you must be under the income limits. But yes, if you opened the account and made initial contributions in a year you were under the income limits, other people could continue contributing in future years. Alternatively, if you could find an institution that would let you open without contributing, you could do that and have other people make the contributions.

Again, the gifting (tax-free) to your mother and then having her make the contributions is a little out of scope but a good strategy.

Thanks for your comment, I appreciate the clarification for other readers!

“Ownership restrictions: In 2009, account owner income must not exceed $220,000 for owners who file joint taxes and $110,000 for single filers. ”

If you look at the IRS publication below, I think that you mean this to be a *contribution* restriction, not an ownership restriction. This is important, for example, in my situation where our combined income exceeds 220K and I own the Coverdell account – consequently, neither my wife nor I can contribute (although we can still *own* the account). However, my Mom is retired and makes less 220K, so she *can* contribute 2K to the Coverdell. It would be up to us whether we would wish to make a tax-free gift of around 2K to my Mom in any one year.

My point is that the income restriction is on the contribution, not the ownership.

You can see the IRS’s publication on the Coverdell at: http://www.irs.gov/publications/p970/ch07.html

One other thing that you may have mentioned – it’s not incorrect, but it is an omission – is with regard to the Roth IRA. Specifically, if your income exceeds 166K, you can’t contribute to a Roth, but you CAN contribute to a regular IRA and then roll it over into a Roth in 2010, regardless of income.

http://www.rothira-advisor.com.....ax_cut.htm

You’re right I didn’t mention them – mostly because they are not solely used for education funding. There are also many restrictions such as have to be issued in both parent and child’s name, etc. But they can definitely be a good options as well. Thanks for the comment.

Disadvantages:
- Currently have low rates of return
- Max of $5,000 per year
- Penalties for early withdrawal

http://www.treasurydirect.gov/.....glance.htm