Coverdell Education Savings Accounts

It's like a Roth IRA for education

Tax-Advantaged

With an education IRA, earnings and withdrawals for qualified expenses are tax-free.

FDIC Insured

Unlike other investment accounts, your Coverdell ESA is insured by the FDIC.

Flexible Spending

Use your funds for secondary and post-secondary education expenses. 

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Eligibility

A flexible way to save for anyone's education

Set up an account for any child who is special to you—you're own, a grandchild, niece or nephew, or even a friend.

  • You're eligible to contribute if your Modified Adjusted Gross Income, or MAGI, is below $110,000 for single filers
  • You can also contribute if your MAGI is below $220,000 for those filing jointly
  • If you're an individual with a MAGI between $95,000 and $110,000 or joint filers with a MAGI between $190,000 and $220,000, you can only make partial contributions

Contributions and withdrawals

Maximum annual limit

You can contribute $2,000 per child per year until age 18. For beneficiaries with special needs, contributions may be made past the age of 18.

Qualified education expense

Make sure you're withdrawing funds for qualified education expenses, such as tuition, room and board and books. Your withdrawals will be made tax-free.

Distribution timeline

The funds from a Coverdell education savings account (ESA) must be distributed by the beneficiary's 30th birthday.

We want to contribute

We offer a $25 incentive for Your Family First customers.D

Taxes on Coverdell ESAs

Post-tax contributions

Like a Roth IRA, your contributions are made with after-tax dollars. But your earnings still grow tax free.

Unqualified expenses

If you withdraw funds and don't use them for qualified educational expenses, the earnings portion of the withdrawal will be subject to state and federal income tax, as well as an additional 10% penalty.

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NMLSR ID 503941

Account openings are subject to normal bank approval.

This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.

Third parties mentioned are not affiliated with First-Citizens Bank & Trust Company.

Applies to Coverdell Education Savings accounts opened within 60 days of enrolling in Your Family First. The APY (annual percentage yield) on a Coverdell Education Savings account is 0.10% as of ${date-today} with a term of 12 to 17 months. Minimum opening deposit of $250 required per account to obtain the reward. A minimum balance of $1.00 required to obtain the stated APY. Fees may reduce the earnings of the account. Penalty may be imposed for early withdrawal. Account will be credited within 90 days of opening. Offers are for a limited time and subject to change at any time. Credit is limited to one per child. Consult your tax advisor for any tax implications.