Coverdell Education Savings

Invest in their future, one smart save at a time.

An Education Savings Account (ESA) is a great way for parents or students to save for elementary, middle and high school education expenses, as well as vocational, college and graduate level courses.

A Bronco Coverdell ESA offers:

• A way to save for education expenses as a parent or student.
• Dividends that grow from the day of deposit to the day of withdrawal.
• Tax-free account growth* until the amount is distributed.
• Distributions that are not taxed if they are less than the student’s qualified education expenses at an eligible learning institution.

An ESA from Bronco** may be used for:

• Tuition, room and board.
• Computers and laptops (even if not required by the school).
• Books and supplies.
• Tutoring.
• Transportation.

Contributions to an ESA are not tax deductible, but deposits grow tax-deferred* until distribution. Total contributions in “after-tax dollars” for the beneficiary cannot be more than $2,000 in any given year, even if multiple accounts have been established (accounts for the same beneficiary may be established by more than one person). There are also contribution limits for taxpayers based on the contributor’s Modified Adjusted Gross Income (MAGI).

An ESA can be “owned” by the person establishing it, or it can be created for someone else. The beneficiary must be under the age of 18 or a special needs student. Any adult can establish an ESA for any child under the age of 18, even if the beneficiary is not related to the person establishing the account. The portion representing earnings on the account will be taxable and subject to an additional 10% tax that can be avoided by rolling over the full balance to an ESA for another family member.