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Coverdell Education Savings Accounts

The Hartford Coverdell

Like a 529 account, a Coverdell Education Savings Account (ESA) is a tax-advantaged savings account that is set up to help cover future education expenses. Earnings on a Coverdell grow tax deferred and proceeds are withdrawn tax-free for qualified education expenses at a qualified institution. Contributions are not tax deductible.

Qualifying beneficiaries, institutions and expenses

  • The beneficiary must be age 18 or under or have special needs.
  • Qualified institutions include primary and secondary schools as well as colleges and universities, and other post-secondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.
  • Qualified expenses include tuition, books, fees, and supplies required for attendance at a qualified education institution.
  • Students must be enrolled at least half time.

Investment guidelines

  • The maximum contribution limit is $2,000 per year per child.
  • Accounts are self-managed and self invested. Similar to individual retirement accounts (IRA), investments may include stocks, bonds and mutual funds.
  • Anyone including the beneficiary can contribute, provided their modified adjusted gross income for the year is less than $110,000 ($220,000 for married couples). Total contributions for the year (not including rollover contributions) cannot exceed $2,000.

Withdrawal guidelines

The account balances must be disbursed on qualified education expenses by the time the beneficiary is 30 years old or gifted to a family member of the beneficiary below the age of 30 in order to avoid taxes and penalties.

You can learn more about Coverdell accounts from the IRS*. Please see your financial advisor to learn more about investing in a Coverdell account with The Hartford.

*The IRS link will open in a separate window. The Hartford assumes no responsibility for content on third-party sites.

 

The Hartford offers a Coverdell Education Savings Account which invests exclusively in The Hartford Mutual Funds. Annual fees for this account are noted below.

Account Balance  Fee
$0 - $9,999    $25
$10,000 - $49,999    $15
$50,000 or greater 
    $0

These annual fees are in addition to any fees that you may pay as a shareholder of The Hartford Mutual Funds. Please click here for an application for The Hartford Coverdell Education Savings Account.

 

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.

 

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