Education Savings
Smart Savings for Our Children’s Future
A Coverdell Education Savings Account (ESA) is a tax-advantaged savings plan designed to help parents save for their child’s education expenses. Contribution can be made until the child turns 18 and funds can cover qualified expenses, including tuition, books from K-12 and through college. With tax-free growth and withdrawals, an ESA is a smart way to invest in your child’s educational future. Start today!
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Our Education Savings Account Products
Coverdell - Education Savings Account: 4.50% APY
Coverdell ESA (Education Savings Account) is a great tax-advantaged way to save for your child's education expenses.
Opening a Coverdell Education Savings Account (ESA) can provide your child with the financial support they need for future education expenses, from elementary school through college. With tax-free growth on your contributions, a Coverdell ESA is a powerful tool to help you save for educational expenses.
Why Choose a Coverdell ESA?
- Tax-Free Growth: Your contributions grow tax-free, and withdrawals for qualified education expenses are also tax-free, maximizing your savings for education.
- Flexibility: You can use funds for a wide range of education-related expenses, including tuition, fees, books, and even K-12 education.
- No Withdrawal Penalty: Unlike other education savings plans, there are no penalties for withdrawals when used for qualified education expenses.
- Wide Contribution Options: Contributions can be made at any time.
Key Features:
- Eligibility: Open an account for a child under the age of 18.
- Initial Contribution: Start with just $500.
- After First Year: Current Rate is 4.50% APY.
- Guaranteed Minimum Growth: Earn a minimum of 3.00% APY on your funds, ensuring confidence in your savings.
- Annual Contribution Limit: You can contribute up to $2,000 per year for your child until they turn 18.
- Qualified Withdrawals: Money withdrawn for qualified education expenses is tax-free; this includes tuition, fees, and even room and board for K-12 and college students.
- Age Limitations: Funds must be used for education by the time the beneficiary reaches age 30, ensuring timely
use of your savings.
Additional Benefits:
- Rollover Options: Funds can be rolled over to another Coverdell ESA for the same beneficiary or for family members without tax consequences.
- Simple Management: Unlike complex investment accounts, Coverdell ESAs are relatively easy to manage, allowing you to focus on your child’s future without stress.
- Tax-Free Gifts: Contributions to Coverdell ESAs can also be considered tax-free gifts under the annual gift tax exclusion limits.
The FCSU does not provide legal or tax advice. Please consult with your legal or tax professional to determine the best investment product for you.
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