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Home / Personal / Save / Coverdell Education Savings Account (ESA)


An ESA is a smarter, better way to save for all kinds of educational expenses.

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The best time to save for your child’s education is now.

Education is expensive but we can help.

Start saving today for your child’s education with a Coverdell Education Savings Account. It lets you save for expenses like tuition, fees, books, supplies and equipment. Contributions to a Coverdell ESA are not tax-deductible, but your withdrawals could be tax-free — including earnings. Benefits include:

  • Tax-free earnings
  • $2,000 annual contribution limit per child until they reach 18.
  • Penalty-free withdrawals for educational expenses
  • Transferable if your child does not attend a school of higher education
  • Variable rate account with low minimum balance requirements
  • Certificates with terms from 6 months to 5 years with a $500 minimum deposit


IRA & Coverdell ESA Rates

TypeMinimum BalanceAPY*Dividend Rate
IRA Savings Account (S5)None0.15%0.15%
Roth Contributory IRA (S10)None0.15%0.15%
Coverdell ESA (S12)None0.15%0.15%
Dividend Rates and Annual Percentage Yields are effective: January 1, 2023
*APY denotes Annual Percentage Yield. Rates are subject to change without notice. Penalty for early withdrawal. IRA denotes Individual Retirement Account.

Contributing to an ESA

Each child can receive a total of $2,000 annually in contributions from all sources1. It doesn’t make a difference if this is done in a single account or with multiple accounts that benefit the same child.

ESA contributors don’t have to be family members. With a wide range of potential contributors, it’s possible that more than one person may want to contribute for the same child. A coordinated effort should be encouraged to avoid excess contributions.

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Can I roll over assets from another ESA?

You can roll over assets from one ESA to a new or existing ESA. The assets, however, must benefit the same child or an eligible member of the child’s family. A rollover contribution does not affect the $2,000 annual contribution limit. Rollovers must be completed within 60 days of the initial distribution and are limited to one per 12-month period.

Am I allowed to change the designated beneficiary?

You may change the designated beneficiary (child) for whom the account is established through a transfer or rollover. For example, the person responsible for the ESA (e.g., the parent) may wish to change the designated beneficiary because the current designated beneficiary has finished school and there are funds remaining. The only limitation is that the new person must be an eligible member of the family.

Who is an eligible family member?

The definition of an eligible family member of the designated beneficiary is fairly broad. It would include: children, grandchildren, stepchildren, brothers, sisters, stepbrothers, stepsisters, nephews and nieces, parents and stepparents, uncles and aunts, first cousins, and spouses of all the family members listed.

It is important to remember that even with this extended range of family members, contributions can be made only for those under the age of 18, unless the beneficiary is a special needs beneficiary.


Tax Deductions: Consult your financial advisor, accountant or tax advisor for more information.

1 A contributor may be limited in the amount of their contribution if their modified adjusted gross income exceeds $95,000 for single filers or $190,000 for joint filers. Above these income levels, the ability to contribute is phased out. If the contributor’s income exceeds $110,000 for single filers or $220,000 for joint filers, he or she cannot make ESA contributions.