Coverdell Educational Savings
You've heard "the early bird gets the worm"? It's hard to think of a better example of this principle in action than when it comes to college expenses. Start saving now for your child's future educational costs with this tax advantaged option.
The Coverdell ESA can help you set aside funds long before it's time to think about higher education plans. Make deposits and earn dividends so you're ready to cover tuition, books, and more when the time comes.
- Summary
- Save for a child's college education
- Formerly called Educational IRAs
- Earn dividends on balances over $100
- Dividends paid monthly and grow tax free
- No setup or service fee
- Maximum contribution of $2,000 per year
- Withdrawals tax free when used for qualified education expenses
- Contributions are NOT tax deductible
- Contributions can be made until the child is 18 years old
- Funds must be distributed when recipient reaches age 30
- Contributors do not have to be related to recipient
- $100 minimum deposit to open
- More Information
This investment tool was created to help parents (as well as family members and friends) pay for the future cost of a child's post-secondary education. The plan allows total after-tax contributions of $2,000 per year for each child until they reach the age of 18. These contributions and their subsequent earnings are tax free when withdrawn to pay for qualified education expenses.
What is a qualified higher education expense?
A qualified higher education expense is one that is required for the enrollment or attendance by your child at an eligible educational institution.
These expenses include:
- Tuition
- Fees
- Books
- Supplies, and
- Equipment
