Coverdell Education Savings Accounts
Kids. One day they’re running off to to their first day of school, the next they’re packing up and heading off to college. And while we can’t do anything to help slow down time, we can help with your college savings plans through our Coverdell Education Savings Account (CESA). It’s the best way for parents, grandparents, aunts and uncles to contribute to a child’s college fund and offset the rising costs of tuition.
Our Coverdell Education Savings Accounts offer two great ways to save for college:
- Open a CESA Certificate of Deposit for a term of 90 days to 60 months, with as little as $500
- Select a CESA Savings with a minimum opening deposit of just $25 and then make additional deposits of $25 or more at any time
CESA accounts can be opened by a parent or legal guardian. Once open, qualified individuals can then make contributions up to the yearly maximum. The beneficiary of the account can use the money to pay for qualified educational expenses like tuition and books.
- Maximum $2,000 annual contribution per child until their 18th birthday
- Non-individuals may also contribute, including corporations and tax-exempt organizations
- Distributions are tax-free provided they do not exceed "qualified education expenses" incurred at an eligible education institution (qualified elementary, secondary, and higher education expenses) and distributed prior to age 301
- Funds can be transferred to another CESA for a member of the same family provided the new beneficiary is younger than age 301
See IRS Publication 970 for additional information on Coverdell Education Savings Accounts
1A special needs individual, as defined by the IRS, is not subject to the age limitations.