Skip to content

Need help with your retirement or education plans?

Request Information

Coverdell Education Savings Account

Learn more about Coverdell Education Savings Account on the IRS's website.

Best if you...

Are a parent or guardian who wants to save for a child’s education

Tax Advantages

Contribution Limits

  • Limit of $2,000 per year, per student total from all contributors
  • Beneficiary must be under 18 when contributions are made
  • Income limits may apply

Withdrawals / Distributions

  • Tax-free distributions are allowed if used for qualified education expenses
  • Income tax and a 10% early withdrawal penalty may apply if used for non-qualified expenses
  • May withdraw at any time
  • Funds must be distributed or transferred to another family member by the time the beneficiary reaches age 30

Fees

None

Individual Retirement Accounts (IRAs)

Traditional IRA

Roth IRA

Simplified Employee Pension (SEP) IRA

Best if you...

  • Want to reduce taxable income now
  • Don’t plan on making withdrawals until retirement
  • Want to have more flexibility for withdrawals & reduce taxable income
  • Plan to work past age 70

Are self-employed or are a small business owner

Tax Advantages

  • You may be able to reduce your current income taxes now
  • You don’t pay taxes until you take money out, typically when you are in a lower tax bracket

All earnings grow tax-free, & you don’t pay taxes when you take money out

You don’t pay taxes until you take money out of the account

Contribution Limits

For 2024, you can contribute up to $7,000 ($8,000 if you’re age 50 or older)

  • For 2024, you can contribute up to $7,000 ($8,000 if you’re age 50 or older)
  • Limits based on tax filing status and income may apply
  • For 2023, your employer’s contribution cannot exceed the lesser of: 1) 25% of the employee’s compensation, or 2) $69,000
  • Elective salary deferrals and catch-up contributions are not permitted in SEP plans

Withdrawals / Distributions

  • Withdrawals are taxable income
  • Withdrawals made before age 59 ½ could include a 10% penalty
  • Required minimum distributions apply after age 73
  • Earnings are tax-free if they’ve been in the account for 5 years and you are at least 59 ½
  • Withdrawals made before age 59 ½ could include a 10% penalty
  • Contributions are non-deductible and can be withdrawn anytime with no penalty or taxation
  • Funds withdrawn early from a certificate may be subject to penalty or taxation
  • Withdrawals are taxable income
  • Withdrawals made before age 59 ½ could include a 10% penalty
  • Required minimum distributions apply after age 73

Fees

Account Closure Fee: $25 if closed within the first year of opening

Account Closure Fee: $25 if closed within the first year of opening

Account Closure Fee: $25 if closed within the first year of opening

Request Information