Coverdell IRA (Educational)

For long term education savings, we encourage you to set up an Individual Retirement Account (IRA). It’s the best way to guarantee a worry-free education.

The Coverdell IRA contributions are non-deductible but the earnings are tax-deferred and distributions are tax-free if used by the account beneficiary (designated student) for qualified expenses.

Qualified Expenses

  • College or trade school
  • Public or Private elementary and high school
  • Books, supplies, equipment, fees, room and board

Contribution Limits

  • The annual contribution limit is $2,000 
  • Anyone, whether related to the account beneficiary or not, may contribute towards the combined maximum, provided their income is less than $190,000 for married couples filing jointly or $95,000 for individual filers 

Points of Interest

  • No contributions are allowed after the beneficiary reaches 18 years of age, with the exception of special needs children
  • Any distribution not used for qualified education expenses are subject to taxes and a 10% penalty as well
  • All contributions must be made by the tax deadline established by the IRS (usually April 15)
  • Withdrawals must be made before the designated beneficiary reaches 30 or rolled over the the benefit of another family member

Click here to read the 2015-2016 edition of the IRA Newsletter for valuable information.

Retirement calculators will help project your long-term IRA balances.

Your funds are insured separately up to $250,000 by the NCUA.

For information regarding Traditional IRAs, click here.

For information regarding Roth IRAs, click here.