Coverdell Education Savings
Invest in future educational expenses with a Coverdell Education Savings account. Formerly called the Education IRA, this account type gives a tax-advantaged savings vehicle for educational purposes. Unlike a traditional or Roth IRA, the funds contributed are considered a gift to the designated beneficiary under the age of 18. Start saving today for education tomorrow!
- Save for future educational expenses for a designated beneficiary
- No annual maintenance fee
- Interest grows tax free
- Withdrawals are tax free when used for qualified education expenses
- Anyone may contribute, not just family
- Unused funds may be rolled into another IRA for a new beneficiary under the age of 18.
- Distribution may begin at age 18
- Contributions are not tax deductible
- Contributions may be made until child reaches age 18
- Funds must be distributed by age 30
- Must be coordinated with other education plans such as State Tuition Plans or HOPE and Lifetime Learning tax credits
- Maximum contribution of up to $2,000 per child per year
- Contribution income limitations apply**
*Distributions must be used for qualified higher education expenses such as tuition, fees, books, supplies, and equipment for colleges and vocational schools.
**The maximum contribution limit for tax-year 2008 is $2000 per child per year depending on your Adjusted Gross Income (AGI). Joint filers with AGI less than $220,000 and single filers with AGI less than $110,000 are eligible for maximum contribution amounts. Individuals with a modified adjusted gross income between $190,000 and $220,000 (joint) and $95,000 and $110,000 (single) are eligible for reduced contribution amounts. If the modified adjusted gross income is $220,000 (joint) or $110,000 (single) or more, no contributions may be made to anyone's Coverdell ESA.
NCUA insured up to $250,000