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

    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.


    Act Now!

    Call us at 573.581.2381 for more information


    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.

    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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