Coverdell Educational Share Accounts
MINIMUM INITIAL DEPOSIT: $50
|MIN. TO EARN DIVIDEND||ANNUAL PERCENTAGE YIELD||COMPOUNDING PERIOD|
*A penalty will be assessed for early withdrawal
All rates are subject to change without notice. For the most up-to-date rates, please call Member Services at 800.877.4444. The Annual Percentage Yield (APY) stated for all accounts is accurate as of the date listed. Annual Percentage Yield assumes deposits, and dividends paid, are held to maturity. Penalties may be applied for early withdrawal on term accounts. Fees could reduce actual earnings. Refer to “Terms and Conditions” for other account information.
Information accurate as of January 5, 2021.
“The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese Proverb (edited)
Frequently Asked Questions
What can a Coverdell ESA be used for?
- This type of account should be used for higher education expenses, as well as some K-12 expenses.
- Eligibility may include tuition and fees, books, supplies, and equipment that are required for enrollment.
Can I open an ESA as a standalone account?
You must have a Shares Regular Savings Account for the ESA with a minimum opening deposit of $5 in the Shares Regular in addition to the $50 opening deposit for the ESA.
What is the annual deadline to contribute?
You have until the due date for filing your federal income tax return for the year to contribute to an ESA (generally April 15).
Who is in charge of the ESA?
Every ESA must have a “responsible individual” who oversees the account, directs the investments within the account, decides when to withdraw the money, and decides if and when to transfer or roll over the assets to another eligible family member’s ESA. Generally, the responsible individual is the child’s parent or legal guardian. The child may serve as the responsible individual after becoming an adult.
When can ESA assets be withdrawn?
Money can be withdrawn from a child’s ESA at any time, without restriction, and is tax-free if used for qualified education expenses.
What happens to the ESA if a child doesn’t use the money?
If a child does not use their ESA money before they turn 30,* the unused portion can be transferred or rolled over to another eligible family member’s ESA. Any money remaining in the ESA when the child turns 30 will be distributed and taxable to the child.
*Age limit does not apply to special needs individuals.
Can I open an ESA before my child is born?
In order to open the ESA account, we must have the child’s social security number.