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Home > Personal Banking > Retirement Services > Coverdell Education Savings Account
  • Coverdell Education Savings Account

    Act Now!

    Call us at 918.477.7400 for more information

    Learn more about how a Coverdell Education Savings Account can benefit you as you pay for your child’s education.

     

    FEATURES:

    In prior years, Education Savings Accounts were not very attractive to parents, grandparents, and other parties interested in contributing to a child's education because contributions were limited to $500 and could only be used for higher education. The new tax laws have made significant changes that make them much more attractive.

    Our Education Savings Account provides tax-free investment growth for children under the age of 30. There is no tax deduction, but tax-free growth replaces this benefit.

    Significant Changes

    • Contribution limit is $2,000/year per child until age 18
    • Education Savings have been expanded to include elementary and secondary school expenses in addition to higher education
    • Non individuals, such as corporations, may act as contributors
    • Contribution deadline is April 15 (not including extensions)
    • A taxpayer may claim a Hope or Lifetime Learning Credit in addition to tax-free withdrawals from the Education Savings Account
    • An individual can contribute to an Education Savings Account and a Qualified State Tuition program (529 plan) in the same tax year

    Restrictions on Participation

    There are some restrictions that you should be aware of:

    • The adjusted gross income phase-out range for contributions for married taxpayers is up to $220,000
    • The phase-out range for single taxpayers is up to $110,000
    • The $2,000 maximum contribution applies to both the account holder and the beneficiary
    • The ESA’s beneficiary can only receive a total contribution of $2,000 in any given year – regardless of the number of contributors to the account
    • The accountholder can make a maximum contribution of $2,000 per beneficiary
    • If there is a balance in the ESA when the beneficiary reaches age 30 it must be distributed within 30 days
    • A portion representing earnings on the account will be taxable and subject to the additional 10% tax, but the beneficiary can avoid these taxes by rolling over the full balance to another Coverdell ESA for another family member

    Put a Coverdell Education Savings Account to work for you, talk to one of our specialists today.

     

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