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| College Savings Options |
Sierra Club Stock Fund is a Smart Match With a Coverdell College
Savings Account
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A Flexible and Powerful Way to Save
The Coverdell Education Savings Account (CESA) allows parents, relatives or others to contribute a total of up to $2,000 per year to a tax-deferred account designed to help pay the educational expenses of a person under age 18.
When you set up your CESA account, you will name a "Responsible Individual" who is the parent or guardian of the designated beneficiary. This individual will manage the account, and can choose whether or not to give up control of the account when the student turns age 18.
Contributions can be made by more than one person, and there is no requirement to have earned income -
so for example, a retired grandparent can make contributions on
behalf of a grandchild. If you are employed, your contributions
could be limited based on your Modified Adjusted Gross Income: |
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Single
Modified Adjusted
Gross Income |
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Married
Modified Adjusted
Gross Income* |
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| Under $95,000 |
Under $190,000 |
Full Contributions are
allowed |
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| $95,000 - $109,999 |
$190,001 - $219,999 |
Contributions are
phased out |
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| Over $110,000 |
Over $220,000 |
No contributions are
allowed |
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Organizations such as
corporations and trusts can also contribute to Coverdell Education
Savings Accounts. There is no requirement that an organization's
income be below a certain level.
*See Chapter 1 of IRS Publication 590 |
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Use Accumulated Funds For A Wide Variety Of Education Expenses
A Coverdell account may be used for tuition or education expenses for primary, secondary or higher education. All withdrawals from the account are tax-free as long as the money is being used for qualified educational expenses such as tuition, room or board.* If the money is not used for qualified expenses, a tax penalty will be incurred.
Keep in mind that for students looking to receive financial aid, assets in a Coverdell Education Savings Account receive a higher weighting in financial eligibility formulas. If the money in the account is not used, it can be transferred to the CESA of a qualified family member.*
*See IRS Publication 970 |
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