A Coverdell Education Savings Account (ESA) is an account that helps individuals save for the cost of elementary, high school or higher education. You can open multiple Coverdell ESA accounts on behalf of anyone under the age of 18, as long as the total  contributions do not exceed $2,000 in total a year per child.

Certain age-related limitations will not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary)."

What are the rules regarding contributions?

For a Coverdell ESA, contributions of up to $2,000 in total per child can be made on behalf of anyone under the age of 18. Eligibility for contributors phases out between $190,000 and $220,000 in adjusted gross income for joint filers and between $95,000 and $110,000 for single filers.

Are contributions tax deductible?

No. Contributions to a Coverdell ESA are not tax deductible. However, they will grow tax-deferred until withdrawn for elementary, high school or college expenses. If used for qualified education expenses, they are withdrawn tax-free.

What is the deadline for opening and funding a Coverdell ESA?

April 15th is the deadline to open and fund a Coverdell ESA for any tax year.

Is there a penalty for a withdrawal from a Coverdell ESA that is not used for elementary, high school or higher education education expenses?

Any withdrawal (distribution) that is not used for qualified education expenses is taxed and is subject to a 10% penalty.

How can I fund my Coverdell ESA?

At BUYandHOLD we offer several ways to fund your account:

• Set up BUYandHOLD Instant Deposit to have your contribution moved from your savings or checking account. Click here to set up BUYandHOLD Instant Deposit.
• Send a check made payable to BUYandHOLD. You should also include a Check Deposit Slip and follow the mailing instructions found on the slip.
• You can also transfer assets from an IRA you hold at another financial services firm. This will be considered a transfer of existing assets, and as such will not be reported as a contribution to your Coverdell ESA. To transfer all or part of the existing assets you hold in an IRA at another financial services firm, go to the Maintenance area in the "View Your Account" section of our site and click on Printable Forms. Choose the Brokerage Account Transfer Form, or click here, then print the form, complete it and return it to BUYandHOLD as per the instructions on the form.