Affinity Coverdell ESA Savings accounts
How does a Coverdell Education Savings Account work?

A Coverdell account is sometimes called an "education IRA" because it's a tax-advantaged savings account to help pay education costs. It is opened in a specific child's name to help pay for their qualified educational expenses:

Funds can be used to pay for qualified K-12 or secondary education expenses, but there are a few restrictions: There's a yearly $2,000 yearly limit for contributions from all sources, which can only be made until the child is age 18. Funds must be used by age 30 or transferred to an ESA for another child in the family. There are also income restrictions: Coverdell contributions phase out for joint filers with incomes between $190,000 and $220,000. For single filers, the adjusted gross income phase-out range is $95,000 to $110,000. 

What is the difference between a 529 and a Coverdell?

529 plans are state-sponsored, so rules and contribution limits vary depending on your state. The tax benefits are similar, but some states also provide 529 plan incentives, such as matching contributions for low-income families. However, generally speaking, the contribution limits are higher for a 529 plan than for a Coverdell Education Savings Account (ESA), and there are no age limits for when contributions can be made or distributions taken. 529 plans and Coverdell accounts also define qualified expenses somewhat differently. For example, 529 plans place greater limits on how funds can be used for the K-12 educational expenses of a designated beneficiary.

What is the income limit for a Coverdell?

Anyone can contribute up to the $2,000 annual limit of a Coverdell account, as long as their income level doesn't exceed a certain threshold. Contributions phase out for joint filers with incomes between $190,000 and $220,000. For single filers, the income limits range from $95,000 to $110,000. 

What expenses can a Coverdell be used for?

Coverdell account funds must be used to pay for qualified K-12 or college expenses at an accredited educational institution, including tuition, books, supplies, and in some situations, room and board. For K-12 students, funds may be used for such expenses as tutoring, computer technology and equipment, and Internet service. However, if funds are not used for a qualified purpose, they are subject to income tax and an additional 10% penalty.

Can I have direct deposit with a Coverdell savings account?

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Does Affinity charge a monthly maintenance fee for Coverdell ESA accounts?

Like most of our savings options, Coverdell accounts have $0 monthly maintenance fees if enrolled in eStatements. If not, there is a monthly fee of $2 for paper statements. 

Are there minimum account requirements for Coverdell accounts savings?

Yes. Our Coverdell ESA Accumulator account has a $50 minimum, so you can start saving with even a modest sum. Once your savings grow, you can transfer funds to a Coverdell Certificate account, which has a $500 minimum deposit requirement and offers better rates.

Can I open a joint Coverdell savings account with my child?

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How do I open an Affinity Coverdell account?

It's easy. You have to join Affinity Federal Credit Union as a member, then apply for one of our Coverdell Savings accounts. Here are all the details.