Coverdell Education Savings Accounts (ESAs)

The Coverdell ESA, formerly known as the Education IRA, is a trust or custodial account created exclusively for the purpose of funding and paying qualified education expenses of a designated beneficiary.

Earnings
Earnings within an ESA grow tax-free until the assets are withdrawn to pay for qualified educational expenses. Distributions are tax free if used to pay for a child's educational expenses.

Designated Beneficiary
The designated beneficiary is the individual named in the document. This person will receive the benefits of the ESA. Generally, the designated beneficiary must be under the age of 18, unless he or she has special needs. All funds in a Coverdell ESA must be withdrawn by the time the designated beneficiary reaches the age of 30.

Eligible Education Institutions
Eligible educational institutions include any elementary or secondary school, and any college, university, vocational school, or other post-secondary educational institution eligible to participate in student aid programs administered by the United States Department of Education.

Contributions
There is no limit on the number of separate Coverdell ESAs that an investor can establish for one designated beneficiary. However, the total dollar amount of the contributions for the designated beneficiary cannot exceed $2,000 per year.

Income Limits
You cannot contribute to a Coverdell ESA if your income is over $220,000 and you are married and file a joint return ($110,000 for single filers).

Investment Options
Fiserv ISS Coverdell ESAs may be invested in many (but not all) of the same broad range of administratively feasible assets as our other account types, such as Traditional and Roth IRAs.
Click here for a list of our Administratively Feasible Investments.

Consult with your financial professional for more information on investments within your Coverdell ESA.

For more information about Coverdell ESAs, consult with your financial professional or refer to IRS publication 970 "Tax Benefits for Education" at www.irs.gov.