Section 529 permits contributions to both a Section 529 Plan and to a Coverdell Education Savings Account in the same year for the same beneficiary.

If distributions are taken from a Section 529 Plan and a Coverdell Education Savings Account on behalf of the same student, Section 529 will require that qualified higher education expenses remaining after reduction for the education tax credits must be allocated between the two savings vehicles.

Section 529 does not preclude a Section 529 Plan beneficiary (or the parent claiming the beneficiary as a dependent) from claiming a Hope Scholarship Credit or the Lifetime Learning Credit. Unlike a Section 529 Plan account, the tax incentives offered by the Hope Scholarship Credit and Lifetime Learning Credit do not come into play until the student has entered post-secondary school.

Hope Scholarship and Lifetime Learning Credits can be claimed for tuition and fees in the same year that tax-free distributions are made from a Section 529 plan or a Coverdell Education Savings Account, provided that the distributions are not used toward the same expenses for which the credits are claimed.

If distributions are taken from a Section 529 Plan and a Coverdell Education Savings Account on behalf of the same student, federal law requires that the qualified higher educational expenses remaining after reduction for the education tax credits must be allocated between the two savings vehicles.