Coverdell Education Savings Account
A Coverdell Education Savings Account (ESA) is an ideal account to help parents save toward expenses for their child's higher education. While funds deposited are not tax deductable, funds can be withdrawn tax-free and penalty free for qualified reasons.
JSC FCU Coverdell Education Savings Accounts offer these benefits:
- Available in a variable savings account with a minimum deposit of $25
- A minimum opening deposit of $500 for an IRA Share Certificate
- Dividends are paid monthly
- Contributions up to $2,000 annually can be made until the child's 18th birthday (income limitations may apply)
- Anyone can contribute to the account
- Funds you contribute and earn are not tax deductable
- Funds you contribute and earn can be withdrawn tax-free and penalty tax-free as long as the funds are used for higher education expenses, such as the following:
- Tuition, certain room & boarding expenses, books, computer equipment, internet access, etc.
- While there are no specific withdrawal requirements, the funds must be used for the child's higher education expenses before age 30 (except for children with special needs)
- Withdrawals not used for higher education expenses are subject to normal income tax plus a 10% penalty
- Ability to make contributions conveniently with payroll deductions
- Safe and secure investment vehicle
- Click here for IRA rates