Educational Coverdell Account
Save for a child’s education with tax-free withdrawals for qualified education expenses.
About the Educational Coverdell IRA
A Coverdell Education Savings Account is for education rather than retirement, despite often being grouped with IRAs. Contributions are not deductible, but the money grows tax-free and withdrawals for qualified education expenses are tax-free. The IRS sets a low annual contribution limit and age restrictions.
What You Should Know
For Education, Not Retirement
Despite the IRA grouping, this account is for education expenses.
Tax-Free Qualified Withdrawals
Withdrawals for qualified education expenses are tax-free.
Contributions Not Deductible
Contributions are made after tax.
Covers More Than College
Qualified expenses can include elementary and secondary education where requirements are met.
Low Annual Limit and Age Rules
The IRS sets a low annual contribution limit per beneficiary and age restrictions on contributions and distributions.
Ask Your Tax Advisor
Eligibility depends on income, and the rules interact with other education accounts.
What You Will Need
- Waypoint membership
- Earned income, where the IRS requires it
- Your own tax advisor
- No minimum opening deposit is stated
Common Questions
The IRS sets an annual limit per beneficiary across all Coverdell accounts for that child. Check current IRS guidance.
Yes. The IRS restricts both contributions and distributions by the beneficiary’s age. Check current guidance.
Yes. Waypoint does not offer 529 plans, but a Waypoint Advisory Group representative can go through the options available there. Note the account fees: a $50 termination fee if the account is closed before age 30 for anything other than education, and a 30-day dividend penalty on a non-education withdrawal before age 30. Talk to a trusted financial advisor or tax professional.
Not sure which fits? Ask a Waypoint Credit Union representative
A Waypoint Credit Union representative will compare the options against what you are actually trying to do, including the ones we do not advertise heavily. Book a time at any Waypoint branch.
Important Disclosures
Federally insured by NCUA.
Waypoint does not provide tax advice. Contribution limits, income thresholds, deduction eligibility and required minimum distribution ages are set by the IRS and change from year to year. See current IRS guidance and consult your own tax advisor about your situation.