Here is a way for parents and students (and even grandparents of future students) to save for college. Though contributions to a Coverdell ESA are not deductible, the amounts in the account grow tax free.
Distributions are tax free as long as they are used for qualified educational expenses such as tuition and fees, books for class, supplies, and even qualified expenses for room and board. Not only can distributions be used for higher education, it can also be used for qualified elementary and secondary schools.
You may have noticed the key term used is "qualified," so be sure to check with the Internal Revenue Service to learn more about qualified distributions or see the link below.
Coverdell ESA Rate
Effective as of December 1, 2018.
|Coverdell ESA (Formerly Education IRA Account)||0.30%||0.30%|
The annual percentage yield (APY) is a percentage rate that reflects the total amount of dividends to be paid on an account based on the dividend rate and frequency of compounding for an annual period. For all accounts, the dividend rate and annual percentage yield may change at any time as determined by the Credit Union's Board of Directors. The dividend rates and annual percentage yields listed above are the rates and yields approved at the last Board of Director's meeting to take effect on the date above. The Plus Checking and Money Market accounts are tiered rate accounts. The balance ranges, dividend rates, and annual percentage yields for each tier are listed above. Once a particular balance range is met, the dividend rate and annual percentage yield for that balance range will apply to the full balance of your account. Balance ranges may change at any time as determined by the Credit Union's Board of Directors. Maintenance or activity fees could reduce the earnings on an account. A penalty may be imposed for early withdrawal of share certificates. Withdrawal of earnings could reduce the APY. Please see the fee schedule for fees related to these accounts.