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Covering College Expenses

Attending private school and college is expensive. Wouldn’t a savings account dedicated to these costs make it easier to pay out-of-pocket? The Coverdell Education Savings Account (ESA) is a savings option for primary, secondary or higher education costs1.

The Coverdell ESA

This account is a tax-advantaged strategy to help save for a child’s future. You can file singly or jointly to open the account.

Anyone can make contributions to the ESA, whether it be parents, grandparents, aunts and uncles or friends. Tax- and penalty-free earnings up to $2,000 per year per child under the age of 18 can be invested. Aside from contributions for a Traditional IRA, Roth IRA or employer-sponsored retirement plan, full contributions may be made to the account.

ยน Qualified Coverdell Education Savings Account distributions are not subject to state and local taxation in most states. Earnings accumulate tax- and penalty-free as long as the assets are used to pay qualified education expenses and are withdrawn before the child turns 30.