Coverdell Education Savings
Enjoy tax benefits when you save for your child’s education expenses.
A Coverdell Education Savings Account is a great solution to help parents save for their children’s education expenses.
- Eligibility - any individual meeting the following income qualifications (adjusted gross income must be below $110,000 for single or $220,000 for married filing jointly)
- Maximum contribution amount up to $2,000 annually per individual beneficiary
- Benefits may be used for elementary, secondary or even higher education expenses at an eligible education institution
- Distributions are tax-free when used for qualified education expenses such as tuition, books, fees, etc. (Consult your tax advisor for details.)
- Beneficiary must be under age 18 or is a special-needs beneficiary
- The balance of the account must be distributed when beneficiary reaches age 30
- Balances may be rolled over to another Coverdell account for another family member
MECU offers a choice of savings options with a Coverdell Education Savings Account:
- An IRA market account offers you the option of adding contributions anytime you want (made even simpler with payroll deduction or automatic transfers from your checking account).
- An IRA certificate lets you make a lump sum deposit of $1,000 or more to open your account and lock in the rate for a specified term.
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MECU Investment Advisors offers mutual funds plus other investment options for those seeking a potentially higher rate of return.
Representatives are not tax advisors. For information regarding your specific tax situation, please consult a tax professional.
A Coverdell Education Savings Account (ESA) is a special, tax-advantaged account designed to help pay the education expenses of a child who is designated as the beneficiary on the account. As always, consult your tax advisor for details before investing.
Eligibility
Contributors must meet the following income qualifications:
- For individual taxpayer: adjusted gross income must be $110,000 or below
- For married taxpayers filing jointly: adjusted gross income must be $220,000 or below
Features
- Benefits may be used for elementary, secondary or even higher education expenses at an eligible education institution
- Competitive dividend rates
- Distributions are tax-free when used for qualified education expenses (i.e. tuition, books, fees, etc.)
- Contribute up to $2,000 annually per designated beneficiary
- No monthly service or administration fees
- Balances may be rolled over to another Coverdell Education Savings Account for another family member
Requirements
- Beneficiary must be under age 18 at account-opening or have special-needs
- The balance of the account must be distributed before the beneficiary reaches age 30
- Joint ownership of a Coverdell ESA is not permitted
Investment options for your Coverdell Education Savings Account include:
- Coverdell ESA market account (Make additional deposits anytime, and use payroll deduction or automatic transfers from your MECU checking account to make contributing even easier)
- Coverdell ESA certificate (There is no minimum contribution, with terms of 12, 18, 30 or 60 months)
For a list of our fees, please check our fee schedule.
The rates below include Traditional and Roth IRAs, Coverdell Education Savings Accounts, and HSAs
| Account Type | Minimum to Earn APY | Compound Frequency | APY | National Average APY | | 6 months | $1,000 | monthly | 0.29% | 0.28% |
| 12 months | $1,000 | monthly | 0.46% | 0.43% |
| 18 months | $1,000 | monthly | 0.56% | 0.52% |
| 30 months | $1,000 | monthly | 0.68% | 0.67% |
| 60 months | $1,000 | monthly | 1.42%
| 1.35% |
| Super Jumbo
6 months | $250,000 | monthly | 0.34% | * |
| Super Jumbo
12 months | $250,000 | monthly | 0.51% | * |
| Super Jumbo
18 months | $250,000 | monthly | 0.61% | * |
| Super Jumbo
30 months | $250,000 | monthly | 0.73% | * |
| Super Jumbo
60 months | $250,000 | monthly | 1.47% | * |
APY -- Annual Percentage Yield (the yield you earn on a deposit over a year)
Early withdrawal penalties may apply, and fees may reduce earnings. Education IRAs require no minimum and are not available for a 6-month term.
National average rates provided by Datatrac, an unbiased research firm that monitors interests rates from over 20,000 financial institutions nationwide.
* No national average is shown for this product/tier because it is not commonly available at other financial institutions.