Harris - Coverdell Education Savings Account

Investments and Retirement Planning

Coverdell Education Savings Account (CESA)

CESA (formerly Education IRA) is an ideal way for parents, grandparents, friends or even corporations to invest for any child's future education expenses.

Primary Benefits

	•	Earnings are tax-free from federal and most state taxes*. Because of this great benefit, accumulated earnings stay in the account, and growth is faster and greater.
	•	Contributions are over and above regular IRA contribution limits. Anyone (assuming income eligibility) can contribute for any child up to age 18.
	•	Funds can be used for qualified education expenses for Kindergarten through grade 12, as well as higher education.
	•	Balances may be transferred from one family member to another since a child's education plans are not necessarily foreseeable.
	•	Special-needs children may receive contributions at any age and have no age requirements for mandatory withdrawals.

Eligibility
Any individual, corporation, nonprofit group or other entity may contribute for any child under 18 years of age.

Contributions
Contributions may not exceed $2,000 aggregate total per year for any one child and are no longer accepted after the child reaches age 18. Contributions are not tax-deductible. The deadline for contributing is the tax filing date for that year (excluding extensions). The only restriction on contributions is income level (see Table E). Consult your tax advisor.

Withdrawals
Funds must be distributed and completely used by the time the child reaches age 30. Funds may be used for a variety of education expenses such as tuition, fees, books, supplies, room and board, transportation, computer technology and other qualified expenses. Consult your tax advisor.

*Consult your tax advisor.

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