Competitive Dividends
Your contributions don't just sit there. They earn dividends at a competitive rate, putting your money to work from day one.
Save today for where they'll go tomorrow.
A Coverdell ESA is a tax-advantaged savings account built to cover qualified education expenses from kindergarten all the way through college. We help you set it up, grow it steadily, and use it when the time comes.
Designed for their education. Built for your life.
Tax-free Growth
Dividends earned in your Coverdell ESA grow completely tax-free.
Tax-Free Withdrawals
When you use the funds for qualified education expenses, you don't pay a cent in tax on the distribution.
Contribute Up to $2,000 a Year
Total contributions across all Coverdell ESAs for each beneficiary are limited to $2,000 annually. Contributor income limits apply.
EDUCATION SAVINGS
How your Coverdell ESA works.
No complexity. No guesswork. Just a smart, tax-advantaged way to save.
- The beneficiary generally must be under age 18 when the account is established. An exception applies to beneficiaries with special needs.
- Beneficiary must be under 30 to use the funds. Any unused funds may be transferred to another qualifying family member
- Funds can be used for qualified K–12 expenses, including tuition, books, tutoring, uniforms, and special needs services
- Funds can also be used for qualified higher education expenses, including college tuition, fees, room, board, and required equipment
- Distributions for qualified expenses are completely federal income tax-free
- Contributions are not federally tax-deductible, but your money grows sheltered from tax while it's in the account
- Competitive dividend rate applied from the day you open your account
- No monthly maintenance fees
- Easy account management online or in branch, whichever works best for you
- For full contribution eligibility requirements, speak with one of our financial specialists or visit IRS.gov
Smarter Banking. More Living. 
Built for Members. Designed for Life. 
Life Comes First. 
Saving You More Than Money. Move Forward with Confidence. Smarter Banking. More Living. Built for Members. Designed for Life. Life Comes First. Saving You More Than Money. Move Forward with Confidence.
Built for Members. Designed for Life. Life Comes First. Saving You More Than Money. Move Forward with Confidence. Smarter Banking. More Living. Built for Members. Designed for Life. Life Comes First. Saving You More Than Money. Move Forward with Confidence. Your Coverdell ESA questions, answered.
The ones we hear most. Answered plainly, without the fine print.
A parent, grandparent, or another adult can open a Coverdell ESA for an eligible beneficiary, generally a child under age 18. The age restriction does not apply to qualifying special-needs beneficiaries. Individual contributors are subject to IRS income limits. Contact our team or review the IRS Coverdell ESA guidance to learn more about eligibility and contribution requirements.
The annual contribution limit is $2,000 per beneficiary. This limit applies to the total amount contributed across all Coverdell ESAs for the same beneficiary during the year.
Coverdell ESA funds can be used for qualified education expenses, including tuition, books, supplies, tutoring, uniforms, certain K–12 expenses, and many higher education costs such as tuition, fees, room and board, and required equipment.
Unused Coverdell ESA funds can often be transferred to another eligible family member. Non-qualified withdrawals may be subject to income taxes and a 10% federal tax penalty.
Yes. The two accounts aren't mutually exclusive. Many families use both. They have different rules, limits, and benefits, so it's worth talking through your overall education savings strategy with one of our team members.
No. Contributions are made with after-tax dollars and are not federally tax-deductible. The primary tax benefit is tax-free growth and tax-free qualified withdrawals.
The account must be established before the beneficiary turns 18.
Maybe. Coverdell ESA eligibility is subject to IRS income limits and phase-out rules. If your income exceeds certain thresholds, your contribution amount may be reduced or eliminated.
Yes. Qualified withdrawals used for eligible education expenses are generally tax-free.
Generally, Coverdell ESA funds must be distributed or transferred to another eligible family member before the beneficiary reaches age 30, unless the beneficiary has special needs.
A Coverdell ESA Account offers flexible education savings with ongoing contributions, while a Coverdell ESA Share Certificate provides a fixed dividend rate for a specific term in exchange for keeping funds on deposit until maturity.
A Coverdell ESA can be a valuable education savings tool for families who want tax-free growth, tax-free qualified withdrawals, and the flexibility to use funds for both K–12 and higher education expenses.
Disclaimer
Arise Financial does not provide legal or tax advice. This information is general and educational in nature and should not be considered legal or tax advice. Consult an attorney or tax professional to guide your specific situation.
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