Helping you realize your potential

With tuition soaring and student aid tightening, saving for a child’s education has never been more important. The good news is that URW Community Federal offers a tax-advantaged way to save for education. The Coverdell ESA (formerly Education IRA) is a nondeductible account that features tax-free withdrawals for the specific purpose of a child's higher education expenses.

The Coverdell ESA gives you:

• Tax-free earnings
• The ability to invest up to $2,000 per year per child
• Penalty-free withdrawals for elementary, secondary and higher education expenses
• The option to transfer the account if child does not attend an institution of higher education

Coverdell ESA qualified expenses have been expanded to include kindergarten through 12th grade in addition to college and trade school costs. An ESA allows total after-tax contributions of $2,000 per year for each child until they reach age 18 (unless the beneficiary has special needs). Contributions and their subsequent earnings are tax-free when withdrawn to pay for qualified education expenses.
What is a qualified education expense? A qualified education expense is one that is required for the enrollment or attendance at an eligible educational institution. These expenses include tuition, fees, books, supplies and equipment.

Who can contribute to a Coverdell ESA? Almost anyone, with three key limitations:

• Each child can receive a total of $2,000 per year in contributions from all sources and in all of his or her ESAs.
• If you are a single filer and your modified adjusted gross income (MAGI) is between $95,000 and $110,000 (between $190,000 and $220,000 if you are a married couple filing jointly), you may make a partial contribution.
• If your MAGI is $110,000 or more ($220,000 or more if filing a joint return), you cannot contribute to a Coverdell ESA.

Anyone can contribute to a child’s Coverdell ESA – parents, grandparents, friends, etc. A coordinated effort can help avoid excess contributions.

Open to:	A Coverdell ESA may be established for the benefit of any child under age 18. Contributions to the Coverdell ESA will not be accepted after the designated beneficiary reaches his/her 18th birthday (except if the beneficiary has special needs). Eligibility to contribute is based on adjusted gross income (AGI). Single individuals with an AGI less than $95,000 may contribute up to $2,000 per child per year to a Coverdell ESA. Those with an AGI between $95,000 and $110,000 may make a partial contribution to a Coverdell ESA, while an AGI over $110,000 makes you ineligible to contribute to a Coverdell ESA. Married couples with a joint AGI less than $190,000 may contribute $2,000 per child per year to a Coverdell ESA. Those with an AGI between $190,000 and $220,000 may make a partial contribution to a Coverdell ESA, while a joint AGI over $220,000 makes you ineligible to contribute to a Coverdell ESA.
Key Features:	Can contribute up to $2,000 per child, per year. Penalty-free distributions may be taken tax-free for qualified education expenses required for enrollment and attendance at the institution. Qualified expenses include tuition, fees, books and required supplies, equipment, room and board (student must attend school at least half time). Transferable if child does not attend an institution of higher education. Account is insured separately from your other deposit accounts, up to $250,000 by the National Credit Union Administration. Dividends are compounded daily and are calculated on the daily balance when the balance reaches or exceeds $50. Dividends are paid on the last day of each month.
Restrictions:	Contributions can be made only for those under age 18. The limitation of age 18 will not apply to any designated beneficiary with special needs.
Charges:	No costs, charges or required minimum balances