How do Coverdell Education Savings Accounts work?
Coverdell ESA are a smart way to help pay for education. Save up to $2,000 per child per year in a Coverdell Education Savings Account (ESA) here at PFCU. There are a number of benefits to a Coverdell ESA. While your contributions are made with after-tax dollars, the earnings and withdrawals are tax-free when used for qualified educational expenses. And you or any of your family members can contribute to the account, up to the $2,000 total annual limit. You can continue saving each year until the child reaches 18. When the money is withdrawn, it can be applied to a broad range of qualified expenses for college and public or private K-12 education – including tuition, tutoring, room and board, and even computer equipment. A unique Coverdell ESA feature is your ability to transfer funds from one child’s account to another child’s account in the same family. To learn more about IRAs or to open an account, call us today at (973) 361-5225.
