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Coverdell Education Savings Accounts (ESAs)


Are you ready to start planning for your child’s future? There is no time like the present! And the perfect way to start is with a Coverdell Education Savings Account (ESA) from Angelina Federal Employees CU.

The ESA allows after-tax contributions of $2K per year for each child until they reach 18 years of age. Contributions and earnings are tax free when withdrawn to pay for qualified education expenses which include tuition, fees, books, supplies and equipment.


Coverdell Education Savings Account Features

  • Contributions are not tax-deductible, but the contributions may earn interest tax deferred until distributed
  • The child will not owe tax on any withdrawal from the account if withdrawal is equal to or less than the child’s qualified education expenses at an eligible educational institution for the year
  • Amounts withdrawn from an ESA that exceed the child’s qualified education expenses in a taxable year may be subject to income tax and to an additional penalty of 10%
  • If the child doesn’t need the money for pre- or postsecondary education, the child may roll or transfer the balance to an eligible family member’s ESA or to a qualified tuition program (QTP)

Angelina Federal Employees CU offers a Coverdell Education Savings Account that pays competitive market rates. No minimum amount is required to set up an ESA.

* The Credit Union provides no legal advice to members, and provides the foregoing information from a reliable resource to give our members a basic understanding of these services. You should consult with your tax or legal advisor regarding any particular and the current status of applicable federal and state laws.