Any financial institution (a bank, investment company, brokerage, etc.) that handles traditional IRAs can help you set up and manage a Coverdell account. You can put your contributions into any qualifying investment vehicle -- stocks, bonds, mutual funds, certificates of deposit -- offered at the institution that will serve as the account's custodian.
If you want to diversify, you can split the money up into several investments. There's no limit on the number of Coverdell accounts that you can establish for a child. The only limit is on the total contributions: You can't put more than $2,000 a year away for the student, regardless of how many accounts he or she has. Just be sure that management fees for multiple accounts don't eat into your overall savings return.
The IRS, however, offers a way out of this taxable situation. The student can roll over the full balance to another Coverdell plan for another family member. This could be a younger sibling, niece, nephew or even his own son or daughter.
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