Coverdell

When it comes to saving for college, the Coverdell Education Savings Account* (formerly the Education IRA) is an excellent option. This unique plan is an ideal way for parents, grandparents, other relatives or organizations to substantially contribute to the education of a child.

Up to $2,000 in total contributions per year are allowed for any child under the age of 18.  Interest on the CESA account grows tax-free from federal and most state taxes, and balances may be transferred from one child to another within a family. At withdrawal, funds must be used for qualified education costs such as tuition, fees, books, supplies, transportation, and room and board. So give your child a head start in life with a Coverdell Education Savings Account!

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Eligibility Requirements and Account Features

Anyone within the income limits may contribute for a designated beneficiary under the age of 18.

Tax Advantages

The earnings on your account are tax-free if used for qualified education expenses.

Tax-Deductible Contributions

Contributions are not tax-deductible.

Tax Treatment of Withdrawals

You can withdraw contributions and earnings tax-free if they are used for qualified education expenses.

IRS 10% Additional Tax on Early Withdrawals

You can withdraw contributions and earnings without a tax penalty if the withdrawals are made for qualified education expenses. Otherwise, same as a Traditional IRA.

*Consult your tax advisor.