MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

How to Use the Education Savings Account (Coverdale)

19 Oct 2025 · 0 min

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In this brief Q&A, Mark Kohler clarifies that one does not "invest" in an Education Savings Account (ESA) but rather contributes to it, and advises using the current term "Coverdell" instead of the outdated ESA. He addresses whether a pass‑through entity such as an LLC or an S corporation can be used to fund a Coverdell account, confirming that contributions can be made through these entities, but emphasizing the proper terminology and the contribution nature of the account.

Is it possible to invest in ESA account from the asset side LLC of the trifecta if they are pass through? If I have an S corp, can I invest in ESA via that?
Well, you don't invest in an esa, you contribute to an esa. The ESA is the old word so don't use ESA anymore. Called a Coverdell. And it's an education savings account, which is cool.
And I can create an LLC
owned by my ira, my esa. I can take this LLC and go buy real estate and my ESA or Coverdell could own it, my Roth could own it, my HSA could own it. And I create this llc. And if you have an S corp, you're going to take draws and then fund an esa. You can't get a write off on an S corp funding an esa. You would do that with personal money. So you take a draw to your S Corp, fund the ESA, fund your Roth, fund your 401k and then go buy real estate in that mix. And that's how that would work. You can do it. Go to my directed IRA podcast where we help clients understand how to buy real estate with their ESA HSA IRA 401K. You'll love it.