Clark Howard Says the Coverdell ESA Is a Forgotten Relic: Why He Says Roll It Into a 529

Consumer sentiment sits at 56.6, household savings rates have slipped from 4.7% to 4% year-over-year, and inflation has pushed the CPI to 330.3 as of March 2026. Families saving for college are working harder to make every dollar count. That context makes Clark Howard’s latest advice worth paying attention to.

On his April 10, 2026 podcast episode, Howard fielded a question from a listener named Curt from North Carolina who holds both a Coverdell Education Savings Account and a 529 plan for each of his two children, ages 11 and 9. A grandparent drips $100 per month into each Coverdell, with no ongoing contributions going to the 529s. Howard’s verdict was direct: consolidate everything into the 529.

Howard described the Coverdell as “what they call in tech, a successful failure”: a product that helped inspire the 529 but has since faded into irrelevance. “I never ever hear anybody who has one anymore. In fact, I don’t think anybody’s asked us about a Coverdell in maybe once in the last 10 years,” he said.

Why the 529 Wins

The mechanics favor the 529 on almost every dimension. Moving money from a Coverdell into a 529 is a tax-free event, so Curt’s family loses nothing in the transfer. Once inside a 529, the funds benefit from what Howard called “far more flexibility” driven by continually revised legislation.

The most meaningful recent change came through the SECURE 2.0 Act, which allows unused 529 funds to be rolled into a Roth IRA tax-free (subject to limits). That change directly addresses the fear that has historically made parents hesitant to over-fund a 529: the worry that money saved beyond tuition costs would be penalized on withdrawal. With the Roth rollover option now available, excess education savings can become retirement savings instead.

Howard also flagged an important structural warning for anyone buying into a 529. “529 plans are only okay if they’re bought what’s known as direct sold from a 529 plan seller, because you don’t need any salesperson involved in the setup, funding, and fund choices in a 529 plan,” he said. Advisor-sold 529s typically carry higher expense ratios that compound against returns over a decade-plus savings horizon.

Howard recommended checking clark.com‘s 529 plan guide to identify low-cost direct-sold options. If Curt’s current 529 is not already a low-cost plan, Howard advised opening a new ultra-low-cost 529 and consolidating everything there. With children aged 11 and 9, the window for compounding growth is still meaningful, but not unlimited. Getting the vehicle right now matters.