Education IRAs (CESA)
Education Savings with Tax Benefits

A Coverdell Education Savings Account (CESA) is a tax-advantaged way to help you pay for the future cost of a child’s education expenses.††† Parents, grandparents, or any interested party may contribute to a CESA (formerly called an Education IRA) to cover certain elementary school, secondary school, and college expenses.

Both earnings and withdrawals are tax and penalty-free as long as they are used only for qualified education expenses, up to permitted limits. These expenses may include tuition, fees, tutoring, books, supplies — even the purchase of computer technology or equipment or Internet access used by the benefiting student and family when the student is in school.

CESAs are complex and may affect other student savings programs, such as federal financial aid. Please consult a financial or tax professional.

	Highlights Below > Benefits You’ll Receive > Fast Facts

Benefits You’ll Receive

• CD choices with a wide range of terms1
• Tax-free earnings on after-tax dollars2
• Tax-free withdrawals for qualified education expenses
• Contributions allowed until child turns 18
• Any unused account funds can roll over, without penalty, to other family members under age 30

	Fast Facts
	Contribution Details Non-deductible contributions may be made annually to each child's account The deadline for contributions is the same as the contributor's tax filing deadline, not including extensions The student who is designated as the beneficiary must be 18 years of age or younger (or older than 18 if the student is of special needs)
	Contribution Limit $2,0003
	Income Limits Under $95,000 AGI4 — individual Under $190,000 AGI4 — married, filing jointly

1. Early withdrawals are subject to a CD penalty.
2. Taxes are due on withdrawal at ordinary income tax rates. Withdrawals must be fully withdrawn when the beneficiary reaches age 30, or the remaining amount is subject to an additional 10% tax penalty.
3. Based on an IRS formula, the allowed contribution is reduced when AGI (adjusted gross income) exceeds the income limits.
4. "AGI" means "Adjusted Gross Income."

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