The Coverdell Education Savings Account was created as a way to save for a child’s educational expenses, from kindergarten through college. The account provides a way for interest earnings to be distributed potentially tax-free, if used to pay for qualified education expenses.
Contribution Eligibility and Amount
There is no requirement that an individual who funds a Coverdell Education Savings Account have earned income, however if the contributor's income is above certain levels, they may not make a contribution to a Coverdell Education Savings Account. Contributions to a Coverdell Education Savings Account are not tax-deductible. While not tax-deductible, check with your tax advisor regarding the tax-deferral benefit this account can offer.
Coverdell Education Savings Account Allowable Contribution Amount:
|Modified Adjusted Gross Income (MAGI) - Single Filers
|Less than $95,000||Full $2,000|
|Between $95,000 & $110,000||Partial contribution allowed|
|Over $110,000||No contribution allowed|
|Modified Adjusted Gross Income (MAGI) - Married, Joint Filers||
|Less than $190,000||Full $2,000|
|Between $190,000 & $220,000||Partial contribution allowed|
|Over $220,000||No contribution allowed|
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This Kids’ CD combines the interest rate of a CD with the ability to make additional deposits of $25 or more. Perfect for young savers.
Tax-deferral can have a dramatic impact on the growth of your savings. See the impact of a Coverdell ESA vs a normal savings account.Calculate