A Coverdell Education Savings Account (ESA) is our most flexible, tax-advantaged, investment savings account. It offers more investment options than similar savings plans and can also be used for K–12 qualified educational expenses.
Best if you
- Need an easy way to save for your children's education
- Are committed to using the funds for education expenses only
- Want to save for a student with special needs
- There is no limit on the number of separate accounts that can be set up for a beneficiary
- Earnings grow tax free
- Funds can also be used for qualified K–12 expenses
Understand the fine print
It may be helpful to consider some of the contribution and withdrawal requirements when deciding if the Coverdell ESA is right for you.
The basic rules for contributions to a Coverdell ESA are simple.
- There can be only one beneficiary per account, and the beneficiary must have a Social Security or Tax ID number, and be under the age of 18.
- The contribution limit is $2,000 per year, per beneficiary.
- Contributions may be made past the age of 18 for special needs beneficiaries.
- Anyone can contribute, as long as their adjusted gross income is under $110,000 (if single) or $220,000 (if married, filing jointly).
- Accounts can be funded by FDIC-insured savings or investments.
- Contributions are not tax deductible.
- Students must be enrolled full-time, half-time or part-time in public, private or religious primary or secondary school.
Coverdell ESA distributions must be used to pay qualified education expenses of a designated beneficiary.
- A beneficiary can take a distribution at any time.
- Distributions are federal-tax free if used for qualified educational expenses.
- Funds must be distributed by the beneficiary’s 30th birthday, or they can be rolled over into a new Coverdell ESA for a new beneficiary.
- Funds can be used for qualified education institutions and expenses, including tuition and fees, room and board, books, supplies, uniforms and computer equipment.
- Distributions are tax free if they are equal to or less than the amount of adjusted qualified education expenses the beneficiary has in the same tax year.
Ready to get started?
Find an advisor
Search by name, location, and more.
Leave us your contact info, and we'll call you back.
How Much Should I Save for College? (Calculator)
Determine your savings goals to attend the college of your choice.
Ready to get started?
Not convinced that a Coverdell ESA is right for you?
Qualified Higher Education Expenses include tuition, all mandatory fees, the costs of required textbooks, supplies and equipment, and certain room and board costs for students who are enrolled at least half time at any accredited school eligible to receive federal financial aid. Non-qualified withdrawals are subject to a federal tax penalty of 10% of earnings and the earnings are taxable as ordinary income.
Individuals with an adjusted gross income of $95,000 to $110,000 (if single) and between $190,000 and $220,000 (if married) may make partial contributions.
Penalty may result from early withdrawal.
Traditional banking services are provided by Truist Bank, Member FDIC.
Only deposit products are FDIC insured.
See disclosuresregarding Reg BI practices (opens in a new tab) relating to Truist Investment Services, Inc. including Regulation Best Interest (Reg BI) practices.
Investment and Insurance Products:
• Are not FDIC or any other government agency insured • Are not bank guaranteed • May lose value
Truist, BB&T®, Sterling Capital®, SunTrust®, SunTrust PortfolioView, Truist Securities®, SunTrust Premier Program®, AMC Pinnacle®, AMC Premier®, Access 3®, Signature Advantage Brokerage, Custom Choice Loan®, SunTrust SummitView®, and GFO Advisory Services® are service marks of Truist Financial Corporation. All rights reserved. All other trademarks are the property of their respective owners.
Services provided by the following affiliates of Truist Financial Corporation: Banking products and services, including loans and deposit accounts, are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank, Member FDIC. Trust and investment management services are provided by SunTrust Bank and Branch Banking and Trust Company, both now Truist Bank, and SunTrust Delaware Trust Company. Securities, brokerage accounts and/or insurance (including annuities) are offered by Truist Investment Services, Inc. (d/b/a SunTrust Investment Services, Inc.) and P.J. Robb Variable Corp., which are SEC registered broker-dealers, members FINRA, SIPC, and a licensed insurance agency where applicable. Investment advisory services are offered by Truist Advisory Services, Inc. (d/b/a SunTrust Advisory Services, Inc.), GFO Advisory Services, LLC, Sterling Capital Management, LLC, Precept Advisory Group, LLC, and BB&T Institutional Investment Advisors, Inc., each SEC registered investment advisers. Sterling Capital Funds are advised by Sterling Capital Management, LLC. Mortgage products and services are offered through SunTrust Mortgage, a tradename for SunTrust Bank now Truist Bank. Life insurance products are offered through Truist Life Insurance Services, a division of Crump Life Insurance Services, Inc., AR license #100103477, a wholly owned subsidiary of Truist Insurance Holdings, Inc.
"Truist Advisors" may be officers and/or associated persons of the following affiliates of Truist Financial Corporation: SunTrust Bank now Truist Bank, our commercial bank, which provides banking, trust and asset management services; Truist Investment Services, Inc., a registered broker-dealer, which is a member of FINRA and SIPC, and a licensed insurance agency, and which provides securities, annuities and life insurance products; Truist Advisory Services, Inc., an SEC registered investment adviser which provides Investment Advisory services.
Comments regarding tax implications are informational only. Truist and its representatives do not provide tax or legal advice. You should consult your individual tax or legal professional before taking any action that may have tax or legal consequences.
Truist Wealth, International Wealth, Center for Family Legacy, Business Owner Specialty Group, Sports and Entertainment Group, and Legal and Medical Specialty Groups are marketing names used by affiliates of Truist Financial Corporation.
Truist Securities is the trade name for the corporate and investment banking services of Truist Financial Corporation and its subsidiaries, including Truist Securities, Inc., member FINRA and SIPC.
FINRA's BrokerCheck® is a free tool designed to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers. Investors may access BrokerCheck by: 1. Visiting the BrokerCheck website at brokercheck.finra.org(opens in a new tab), or 2. Calling FINRA's BrokerCheck toll-free hotline at 800-289-9999 Monday through Friday from 8 am to 8 pm ET.
The information provided should not be considered as tax or legal advice. Please consult with your tax advisor and/or attorney regarding your individual circumstances.
Market data information is obtained from third-party sources believed to be reliable, but is provided “as is” with no warranty. Market data is provided for informational purposes only, does not constitute investment advice, and may not be used for trading. Market data is for the individual use of each site guest, and may not be copied, downloaded, stored or redistributed. Quotes are delayed 15 minutes. Some index information is proprietary to the index owner. Data access and usage is subject to the terms and conditions imposed by our third-party sources. Access or use of any data indicates agreement to these terms.
New York City residents: Translation or other language access services may be available. When calling our office regarding collection activity, if you speak a language other than English and need verbal translation services, be sure to inform the representative. A description and translation of commonly-used debt collection terms is available in multiple languages at www.nyc.gov/dca.
Branch Banking and Trust Company is now Truist Bank. Learn more.
BB&T and SunTrust have merged to become Truist. Both institutions will continue to offer independent product lines for a period of time. This may include differing underwriting guidelines, product features, terms, fees and pricing. Our friendly teammates at your local SunTrust branches will be happy to walk you through their respective products. You can also learn more by contacting them at 800-SUNTRUST or SunTrust.com.